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Title Insurance and the Real Estate Market in India

Introduction:

Title Insurance:

Title insurance is an insurance which provides indemnity to the developers or builders and the homeowners of the property which are related to the disputes in the title of the property.

Types of title insurance:

There are mainly two types of title insurance:

  • Lender’s title insurance
    • Owner’s title insurance

Advantages of Title Insurance for Home Buyers:

Any home buyers of individual land cannot have title insurance but society homebuyers can have title insurance. In a simple sense, it says that title insurance is available to the society home buyers but not to the home buyers of individual land.
In the near future if a third party claims anything then the title insurance can be invoked and homebuyers can be indemnified. Any defence or legal costs incurred are mentioned in the policy.

IRDAI:

IRDAI (The Insurance Regulatory and Development Authority of India) is an autonomous body which regulates and promotes re-insurance industries and the insurance in India. This body has a total 10 members among them there is one Chairman, five full time and four part-time members who are appointed by the government of India.

There is a need for a standard structure for title insurance and IRDAI is working on it to get a standard structure for title insurance because it is mandatory for the RERA registered projects.


Less Number of Indian Insurers offers Title Insurance:

There is a lack of underwriting expertise by the Indian insurance companies to offer the title insurance products. So there is a need for reinsurance support for the Indian insurers to offer the product as the cost is high.

Some Challenges with Title Insurance:
Bar against developing the title insurance policy product by the insurance companies (Major reasons):
1. There are a large number of title related swindles.
2.  The legal actions taken in case of title disputes are sluggish.
3.  An amount or sum involved in conducting due diligence of the property is large.
4.  There is the Limitation Act of 1963 which gives limitation within which a suit has to be filed but in some cases, the courts refuse the delay and this consequences with uncertainty in respect to litigations which may arise on a property.

The need for Title Insurance:

Title insurance focuses to invest in real estate and helps the developers and homebuyers to recover themselves from financial loss which comes from the title disputes and other defects relating to the property.

Now it is compulsory to have title insurance under RERA and it is also noticed that consumers and insurance companies will have advantages as well.

The advantages of title insurance are:-
a.  It clears the due diligence process
b.  It helps in the risk factor of real estate transactions
c.  It speeds up the real estate investments
d.  Title insurance covers all the disputes in the title of a property
e. Title insurance provides litigation costs

The developer or builder should get title insurance for new projects and ongoing projects under RERA and obtaining title insurance is a practice which must be followed in the real estate sector.
The insurance regulator, Insurance Regulatory and Development Authority of India (IRDAI), are making rules and regulations to promote the implementation of title insurance in India.

Costs of Title Insurance:

Costs of title insurance depend on the insurance company you choose and also it depends on the property valuation.

Conclusion:

The above body discusses a very important topic that is “Title insurance and real estate market in India”. There are many disputes arising day by day relating to title insurance matters. So, it is better to consult with an expert relating to these matters.

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