Will Title Insurance be efficacious in India?

By Harmesh Madhyani, General Manager, Taxation, Finance & SAP – Raheja Universal

Traditional insurance policies protect the insured against losses and or damages. For example, a car insurance policy will cover the car repairs costs in case of accidents, and a health insurance policy will cover the costs towards the treatments n of an insured due to health problems.

However, title insurance is different as it protects the insured against claims for unknown defects of the past. Earlier this year Title insurance policy was made available for Developers in India, to embrace, a recoup policy which insures against financial misfortune due to claims against the title to land or property. Section 16 of the RERA Act entails developers to implement title insurance; nonetheless, it will be made mandatory after the regulator of each State notifies it. The concept of Title Insurance itself is new to the Indian Real Estate Business.

Title insurance like any other insurance policies helps you from unanticipated claims. However, the significant distinction which is additionally the favourable position is that title protection on your property is a one-time premium; there is no yearly premium to keep the policy in effect. It covers your real estate property as long as you or your heirs retain an interest in the property.

The title insurance policy available globally is primarily on two categories, Owner’s Policy and Lender’s Policy. In India, section 16 under RERA act only speaks about the owner’s policy. This indicates that India is in a nascent stage at developing insurance policies for the Real Estate sector.

Title insurance is accessible in many countries, including Britain, Canada, Australia, and Europe among others.

Title insurance will help built confidence in Developer; Customer will have protection as they would have made a huge investment in such property. This will help in enhancing the image of the Real estate sector, as it would ingrain trust in the minds of the buyers. It will likewise go about as a due diligence mechanism for home fund establishments. Analysts believe that the accessibility of title protection will likewise support private value interest in Indian real estate, as worldwide financial specialists are exceptionally specific about clear titles. There will be expanded enthusiasm for the sector, once such a structure is set up and this will be a win-win circumstance for all the stakeholders.

Title insurance will require an extensive title search of the property. This search will minimize the potential liability to the property owners by discovering any foreseeable title issues. However, once a property owner purchases and takes possession of a property, title insurance will defend against any litigation that challenges the validity and legality of the new property Owner. It will not be out of place to mention that Maharashtra has already introduced Land Bill 2018 where under the Government intends to help landholders by helping them get the protection of the State Government as regards their title holding. This is too preliminary though.

As per the buyers approach the Title Insurance can help to understand and cover title issues occurred due to forgery or fraud, failure during transfer conveyance, takes due at the cover date insufficiency in the provision of documents or submission of incorrect documents. With regards to the Real Estate sector, Title insurance protects investment in real estate and provides coverage against financial loss arising from title defects and other irregularities relating to the property. It safeguards the possible disputes that may arise in respect of the title of the property. The Developer purchases the Policy, in effect assuring them of their title, is protected. As with any insurance policy, the Buyer is assured of any loss due to a defect in title to the property and also the huge costs of litigation. Though there are exclusions from coverage of which policyholders should be aware.

In light of the previously mentioned things, we can be guaranteed about the stream of fascinating and energizing projections in a long run. Title insurance has tremendous untapped potential which will increase the value of the Indian land protection advertised by giving a more prominent level of conviction and straightforwardness for all the key players in this market.





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