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 real estate business.
It is a favourable 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 business. Since this insurance is mandatory now, within few months, we will not see developers who do not abide by RERA rules and regulations in the market. RERA is trying to make 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 about lopsided sales agreement, 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, landowners. Real Estate Developers are obligated under the Act to purchase the title insurance.
This insurance offers a strong reputation and tracks record to builders, 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. The insurance compliance will ensure the working of strong and reputed developers in the coming future.
Hence, all the developers, builders, promoters operating in real estate business should buy this insurance. For financial and title security of home buyers, developers have to buy title insurance for their projects under the compliance of RERA act.
A residential project was started by a real estate promoter. The project involves more than 8 apartments. The residential project promoter has bought title insurance in 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 hospital but the developer sold the property to the real estate promoter which has started a residential business. This is the case of a title defect.
Fortunately, real estate promoter has title insurance which will save the defence cost and helps to resolve the title defect. Dealing with title defect is time-consuming and costly and when insurer handles such matter, 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.