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Will Title Insurance be efficacious in India?

Saturday, October 20, 2018

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

Traditional insurance policies protect the insured against losses and or damages.

However, title insurance is different as it protects theinsured 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 policieshelps you from unanticipated claims. However, the significant distinction which is additionally the favorable 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. In any case, the idea is new in India, at present only HDFC Ergo & Raheja Universal have propelled title protection in India.

Title insurance will help built confidence in Developer; Customer will have protection as they would have made 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.

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