Prior to understanding the concept of ‘Title Insurance’ one needs to be clear about its very essence. It refers to the legal ownership over and the right to deal with, use,and dispose property. When a property is purchased, the home buyer acquires its title/ownership. However, there are several cases where discrepancies with regard to title transfers have been recorded. In order to prevent a buyer from such hazards, title insurance acts like a confidence booster and a secure safety system. There are innumerable benefits that a property purchaser draws by opting for title insurance. They are as follows:
Meets the Statutory Compliance of RERA
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Real Estate (Regulation and Development) Act, 2016 (RERA), makes it of utmost importance for developers, constructors, landowners and homeowners to purchase title insurance. The insurance adds a protective layer to the real estate business, and works towards easing the process of real estate financing and credit availability. If a homeowner possesses the insurance, it increases the value of their property in terms of collateral and makes it seamless for them to obtain credit facilities.
Curbs Litigation Costs
Ambiguity in land title, unpaid property taxes, and spouse’s claims on property discovered after purchase might draw home, huge financial costs.In order to overcome such troubles, title insurance is a must-have. The cost of such litigations can highly burden an individual, but title insurance helps in waging through the burden by covering legal expenses. These include the lawyer’s fees, legal documentation expenses, settlement costsand several others. Some insurers also assist with out-of-court settlements.
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Handles Disputed Ownership Claims
In India, there isn’t any digital record system that efficiently tracks down the ownership record of a property. In the absence of an organised system, there are several frauds pertaining to past property title charges or unclear land titles. The insurance acts as a shield against such property mishaps, and hence, becomes a rescue remedyfor home buyers. Furthermore, the policy also provides a track record of the property, thereby allowing the home buyer to be safe from such contingencies.
Value for Time and Cost
Property involves a humongous cost, and once involved in a relatedfeud, the entire process turns out to be a hassle in itself, along with incurring additional costs. Insurance companies provide legal assistance, and most of them also help home buyers in making out of court settlements. These policies assist in tackling disputed ownership issues in a very cost-effective manner. The most important advantage is that title insurance is a one-time investment,butacts as a guardian for over a period of seven years.
Adds a Safety Quotient to Residential Property
No home buyer would be willing to invest in a property that does not seem secure or trustworthy. If developers avail title insurance, any ownership related troubles arising during the construction of the property can be curbed. Title insurance also enhances the credibility of aproperty and adds to the confidence of house financing companies, subsequently making it easier to obtain funds to make property oriented transactions. The insurance increases the value of the investment profile of the property, and works wonders in bringing aboutdependabilitywithin the real estate sector.
The very concept of title insurance isknown to meet the mandates of RERA, but it can be purchased even for properties that are not registered with RERA, and have been built eons ago. Anyone can obtain title insurance, especially in the case of doubts regarding the ownership of property. It is always recommended that home buyers be safe than sorry, and hence opt for title insurance, in order to ensure a safe and secure property investment.
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The author is CEO, Sai Estate Consultancy Chembur Private Limited
