“TITLE INSURANCE” – New Age Breather For Home Buyers

As Indians, we associate the term ‘insurance’ as a financial protection. We are well aware of life, medical and car insurance policies, however; many are still unaware about insuring the title of a purchased property.

What is property Title Insurance?

A title insurance is a registered document bought during a transition of property from one hand to another. It is nothing but protection provided to a property owner against any financial losses caused due to disputes in property title or any other fraud. A change in the title happens each time a property is exchanged. To protect the investors or homebuyers, the insurance company vows to compensate the buyers in case of any loss incurred or any defect in the title while buying it from the seller. While other forms of insurances give protection against any possible mishap in the future, Title Insurance offers coverage against an event that has already occurred in the past leading to the legal dispute. Thus, in other words, this policy covers for losses that have been ensured by the insured prior to issuing of the policy.

Why do I need Title Insurance?

Although fairly new in India, this policy is quite well known in the European and American real estate markets. Coming to Indian markets, the need to introduce this policy was driven by non-transparency and property frauds going on since decades. Digitization of land records, RERA rules, and high rates have only recently been established; which become a never-ending loophole for property fraudsters. A recent research suggests that defective land documents and skipping proper documents lead to the highest property disputes amongst all legal cases recorded in our judiciary system. That is why buying a title insurance is a must before purchasing your dream home.

What does the policy include?

As for every other insurance policy, provider inclusions may vary from company to company. However you should check for a basic provision for protection against your ownership rights. This includes duly stamped and registered documents relating to a transference of property free of any fraud, impersonation, old legal stay orders etc. The policy should also cover defense charges which include court and lawyer charges, in case if the property title is challenged. An added service would be compensating the opposing parties in a case out of court settlement if opted for.

Support of Indian Government

In light of the recent increase in fraud and rising property disputes, Section 16 of the Real Estate Regulatory Authority (RERA) Act has mandated developers to purchase title insurance for every ongoing and new project. The good part about the new property is that this has to be purchased during project registration by the builder. Also, RERA states that a builder has to give a written affidavit to buyers stating that the land, construction and individual properties all are devoid of any illegal title disputes and have legitimate ownership documents.

How much will it cost to buy Title Insurance?

As of now, it is really not a big deal to get title insurance. Since it is a new concept only a few companies like New India Insurance are providing this policy. Unlike other insurances, for example, medical, you have to pay a small onetime fee only and you are covered for life.
In conclusion, a clear title is necessary to establish and sustain ownership of your property. Every home buyer wants to begin on a clean slate for themselves and also prevent any untoward legal mishap for their next kin who will use the property. Title insurance is a small but important step towards this safety.