In order to protect real estate owners from title challenges, a task force from the Insurance Regulatory and Development Authority of India (Irdai) recommended comprehensive insurance coverage for all developers, dealers and successors. It also recommended a legal fee policy for land title owners and promoters / developers and a retail policy for dealers, retail customers and financiers who purchase units under the Law projects. regulation and development (RERA).
The Real Estate (Regulation and Development) Act of 2016 legally recognized the concept of title insurance. Title insurance is indemnity coverage that insures against financial loss due to property defects in real estate. Title insurance is used to defend against legal action attaching the title or to reimburse the insured for the actual monetary loss suffered up to the limit prescribed in the policy. Currently, title insurance products are offered by a few general insurance companies and cover the sponsor, the company and all of the company’s shareholders for up to 12 years. However, none of the insurers at this time have filed any retail product.
How Title Insurance Helps
Title insurance covers losses caused by title problems that originate from past events. Insurers purchase coverage by searching public records to develop and document the chain of title and to detect known claims or title defects. In addition, institutional lenders require title insurance to protect their interest in collateralizing loans secured by real estate.
Title insurance coverage offered
The committee in its report recommended that promoters be able to purchase the policy at the start of the financial assessment and due diligence of the project / RERA approval application. State governments will decide on the minimum mandatory coverage based on their local circumstances. Individuals can purchase coverage at the time of possession. He suggested that the policy’s sum assured for developers be a certain percentage of the project’s value and for retail buyers should be the purchase value of the property.
The panel suggested synchronized efforts to popularize new insurance products so that there is demand for the title insurance product from individual buyers, banks and lending institutions. He suggested that promoters can opt for the full comprehensive product available from insurance companies. They can also opt for a minimum liability policy for defense costs during the registration and approval process with RERA authorities.
Retail Policy of Allocated / Individual Buyers
The retail policy will cover any defect or lien on the title on the date of coverage caused by forgery, fraud, undue influence, coercion, incompetence, incapacity or identity theft. ; failure of any person or entity to authorize a transfer or transfer; a document affecting the title not correctly created, signed, attested, sealed, stamped, recognized, notarized or delivered, etc. Exclusions from policy coverage would be laws restricting, regulating, prohibiting or relating to contaminated land, pollution or other environmental protection; any governmental, police or emergency power; or any forced acquisition by government authority, nationalization, etc.
The insured must notify the insurer in writing within 10 days if he is named as a party or is called to testify. In the event of a claim, the insurer will pay the limit of the indemnity or settle with the insured or with a party other than the insured.