Title insurance is a comfortable solution for all parties involved in a real estate transaction, facilitating the conclusion of the transaction even when there are certain reservations regarding its completion, due to potential risks related to the title.
When you choose to get title insurance, you transfer to an insurer the risks related to the defects of your title. This way, you can be sure that you take as few risks as possible when investing in a land or building. This policy is a complementary solution to the due diligence report, which the law firms prepare for analyzing the validity of a title.
What risks does it cover?
The lists of risks that may lead to the termination of the title of property and which are covered by this type of insurance include:
Requests for retrocession
The title’s inconsistencies with the laws in force at the time of its conclusion
Vices of the building permit
Lack of access to property
Falsification of documents
Fraud by the seller
Failure to comply with the legal procedures for the allocation of public property lands etc.
Hidden defects / non-conformities of the acquired title of property
Any defect or pledge, privilege, mortgage of the title, unknown at the date of purchase
False, incompetence, incapacity affecting the title.
Here is how the title insurance policy works:
At the time of the conclusion of the sale and purchase contract, the insurer issues an insurance policy whose beneficiary is either the owner of the building or the bank – in the situation of purchasing the real estate property through a bank credit agreement. In case of any problems related to the title of property, the insurer will pay all the fees, costs and expenses of the legal proceedings related to the defense of the property title, including stamp fees, fees for expertise, lawyer fees etc.
The beneficiary of the title insurance is compensated within the limit of the insured amount, if the property right is lost, despite the due diligence. Compensation is at the level of the purchase price of the building, with possible indexations. The compensation concerns only the direct loss suffered by the property insured as a result of the risk, not the indirect losses, caused by not obtaining the expected profit or interrupting the activity.
So, not sure if you need owner’s title insurance? You do need it if you want to enjoy the following benefits:
A guarantee of paying greater attention to the legal and contractual elements of the business
Facilitating obtaining a loan / financing option under improved conditions
Facilitating the conclusion of the transaction even when there are certain reservations regarding its completion
Proving negligence in order to file a claim for damages is not required.