Title insurance protects against financial losses arising due to fraud or title disputes. It will add a protective layer to the property-buying event. In a title insurance policy, the premium amount is paid once for the entire tenure.
This is a must-have insurance policy for promoters of all new and ongoing property developments registered with the regulatory body.
In May 2016, Real Estate Regulations and Development Act has made it mandatory for all registered new and ongoing property development projects to buy title insurance, provided that the property should exceed 500 square meters or 8 apartment units. Real Estate Regulations and Development Act fosters the compliance of title insurance in real estate projects.
The real estate regulation act has finally made it a compulsion under the purview of section 16 to have title insurance. In order to streamline title transfer without defects, it is a much-needed action taken by RERA to foster transparency in the real estate business.
Read: What is Title Insurance? What does it cover?
It is a favorable decision taken by RERA for the betterment of home buyers. As a home buyer, you should always check that your developer is actively pursuing RERA compliance. Title insurance provides credibility to developers and promoters of real estate businesses. Since this insurance is mandatory now, within a few months, we will not see developers who do not abide by RERA rules and regulations in the market. RERA is trying to make the real estate business more transparent and safe. It also provides an assurance to home buyers that they are dealing in a healthy property market.
Title insurance will facilitate a well-planned marketed residential housing project in the real estate market. Homebuyers can negate the issues of lopsided sales agreements, title defects, and several other risks which are present in an under-construction project. This policy should be purchased by property investors who are engaged in joint ventures with developers and who wish to protect their investments, housing finance companies, and landowners. Real Estate Developers are obligated under the Act to purchase title insurance.
This insurance offers a strong reputation and tracks the record of builders, and developers in order to attract home buyers so it is not a cost addition rather it is a valuable addition to the real estate business. It is beneficial to be RERA compliant. RERA is trying to clean the real estate market with the introduction of title insurance. Insurance compliance will ensure the working of strong and reputed developers in the coming future.
Read More: What are the benefits of title insurance policy?
Hence, all the developers, builders, and promoters operating in the real estate business should buy this insurance. For the financial and title security of home buyers, developers have to buy title insurance for their projects under the compliance of the RERA act.
Case Study:
A residential project was started by a real estate promoter. The project involves more than 8 apartments. The residential project promoter bought title insurance at the very beginning of the project. A case has been registered on the land against the title defect while the project was under construction. The case states that the land was allocated to some developer for the construction of a hospital but the developer sold the property to the real estate promoter who has started a residential business. This is the case of a title defect.
Fortunately, real estate promoter has title insurance which will save the defense cost and helps to resolve the title defect. Dealing with title defects is time-consuming and costly and when an insurer handles such matters, it provides legal assistance to handle such cases accurately and timely. It majorly covers all the legal expenses incurred in litigation.
Title insurance is an important risk mitigation tool against ownership defects. RERA has made it mandatory to buy this insurance so in order to comply with the legal requirement, homeowners, developers, promoters and builders should buy title insurance timely.
About The Author
Rajesh Mehta
MBA Finance
Rajesh has become a distinguished expert in liability insurance with over 8 years of extensive experience in the insurance industry. As a dedicated writer for SecureNow, he crafts insightful and informative blogs and articles that help businesses and individuals understand the nuances of liability insurance, from policy details to industry trends. Throughout his career, Rajesh has developed a profound knowledge of various types of liability coverage, including professional, general, and product liability insurance. Their expertise enables them to break down complex topics into accessible content, making it easier for readers to make informed decisions about their insurance needs.