Title insurance policy addresses title defects when the property changes hands. It is a form of indemnity insurance policy that helps in curing title defects. This policy tackles title problems such as undisclosed heirs making claims for the property, mistakes by recording a document, or property taxes not paid by the prior owner, etc.
A Title insurance policy ensures good title at the time when the property is sold i.e. clear of encumbrances. Be it fraud, forgery, undisclosed heirs, or spousal claims, this policy handles various types of ownership issues.
Title insurance is indemnity insurance that fosters safe transactions while purchasing a house. Title insurance policy exists to defend your title in court as it covers defense costs. This policy covers past title problems. It does not cover future events. It is a one-time payment event and safeguards your title for seven years which is the minimum tenure.
While investing in real estate or any other building investment project, this policy plays an important role as it provides an assurance to the investors or lenders that title insurance policywill provide financial stability if faced with any title defects. This policy provides you with peace of mind by minimizing the risk associated with land ownership.
Title insurance covers the legal cost, settlement cost, or any other loss caused due to ownership issues. In the real estate business, it becomes mandatory to buy title insurance policy before starting any new project.
If you are into the property business, title insurance is a must-have insurance policy in order to mitigate the risk of after-purchase ownership issues. This policy follows the retrospective effect and addresses all claims related to title defects assumed in past years i.e. prior to the purchase of the property.
Also Read: What is the requirement stemming from RERA on title insurance policy?
Sometimes, if you are investing in real estate and in order to avail of a loan, your lender will ask you to purchase title insurance in order to protect the amount they lend.
As unreliable property records could be a serious trust deficit. Hence, it is crucial to buy title insurance policy in order to facilitate transparency and safe transactions in the real estate business. It safeguards the property owner and its lenders against losses related to the property’s title or ownership.
Need not worry, if mortgage or property taxes were not paid by the prior owner or if your property documents were not recorded properly or if any other form of title fraud was assumed in your property. During such eventualities, title insurance provides provides a helping hand to resolve such title issues. This policy provides a sense of security as home buyers will be able to stop worrying about title defects and several other risks which were so far considered part and parcel of investing in the real estate business or buying a house.
Case Study:
Naman purchased a property near his workplace without knowing the nitty-gritty about it. Later, a missing heir started making claims to the property which gave rise to a title defect. He has to fight the case in court and bear the cost of litigation and settlement. In such a case, if Naman would have purchased a title insurance policy, he would be covered for the defense cost which could have saved him from spending against legal expenses or settlement costs.
Hence, it is important to buy title insurance to cover loss due to title issues and protects a buyer’s ownership interest.
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.