What is Title Indemnity Insurance?
Title indemnity insurance is a form of insurance which protects owners and mortgage lenders against financial loss resulting from challenges or defects in the title to real estate. It is sometimes referred to as defective title insurance, or legal indemnity insurance.
Title insurance is principally a product developed and sold as a result of an alleged comparative deficiency of land records. It is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens or other matters.
It will defend against a lawsuit attacking the title, or reimburse the insured for the actual monetary loss incurred, up to the amount of insurance provided by the policy. Title indemnity insurance is ordinarily taken out by a purchaser of the property or by the institution lending money on the mortgage in an amount equivalent to the purchase price of the property.
Do I Need Title Indemnity Insurance?
Title indemnity insurance is essential when specific defects with the title have been identified, and is usually taken out during conveyancing processes as a defective title can make a sale difficult.
Certain defects can be difficult, costly or impossible to resolve, and whilst title indemnity insurance will not resolve the defects, it will provide protection if losses arise as a result of them. It can cover both known and unknown defects.
Unlike other forms of insurance, title indemnity insurance is not paid in monthly or annual premiums. Rather, it is a one-off payment that will provide cover for the title. Title related lawsuits can be incredibly expensive and can result in mandatory construction or demolishment work. Should a lawsuit occur, title insurance is usually well worth the cost.
What Does Title Indemnity Insurance Cover?
There are a wide range of possible title defects. Title deed defects that this insurance can cover include:
Absence of Easement: This is where a property has to be accessed via private land (for example a private road), but the deed does not give the owner right of way and legal access to this land. In this case, the owner of the land could refuse access to the property.
Lack of Planning Permission: If a property has been extended or converted without permission from the proper planning authority, title indemnity insurance can protect the owner if the council decides to take enforcement action.
Lost Titles: This is where title deeds have been lost or destroyed, and therefore certain facts about the property are unknown.
Inadequate Detail: This is where a title deed does not contain full and accurate descriptions of the property, leaving it open to interpretation.
The policy will cover losses related to legal challenges against the deed, for example, if part of the building needs to be demolished, or to cover legal fees if the owner is taken to court
How to Take Out Title Indemnity Insurance
At Surety Bonds, we can help you to find the best title indemnity policy for both commercial and residential properties. We will work closely with you to find a suitable policy that meets your needs and provides comprehensive cover at an affordable price. We have strong relationships with a number of banks and insurance companies, meaning we can access and identify the best protection for your property.
Get in touch with us today to talk to our experienced team, and get fast title indemnity insurance quotes.