About Title Insurance
Title insurance helps to confirm and protect a property buyer's ownership of their property.
Insurance policies of various types generally indemnify the insured party against loss suffered as a result of an event covered by the policy. In this sense, title insurance is no different than any other kind of insurance. However, the similarity ends there.
If you have an auto insurance policy, for example, it likely covers you for items such as theft or damage to your car that occur after the policy is issued. A title insurance policy, however, covers you for past events that might impact their ownership of your property, such as mortgages registered over the land as of the date of the insurance policy.
The premium for an auto insurance policy or for a policy covering storm or fire damage to your home is payable annually. The premium for a title insurance policy is only paid once—when the policy is issued and coverage lasts for as long as the insured has an interest in the property.
Frequently Asked Questions (FAQ)Why does someone need title insurance when they can rely on their lawyer?
Even in a situation in which a lawyer has exercised his/her utmost due diligence, there are still some risks, such as fraud, that they cannot discover from title investigation and many items that are excluded from the lawyer's opinion, such as checking that signatures are genuine and internal corporate approvals and processes have been followed. In many countries in Asia, lawyers are not required to carry professional indemnity insurance, so even in the event that it were possible to prove the lawyer had been negligent, sufficient financial compensation is unlikely to be achieved.
Furthermore, property transactions may be delayed or cancelled by title defects identified through a lawyer's title investigation. Our Defective Title Insurance Policy covers many of these so that transactions can be facilitated.
Title insurance provides "belt and braces" coverage for those items which the solicitor has reviewed, while also providing additional coverage over other unknown defects.
No, this is a "no-fault" policy. If a claim has arisen that is covered by the policy then the insured simply notifies us and we will take action as outlined in the policy. There is no need to litigate to prove fault.
We do not provide indemnity for loss resulting from illegal structures unless the illegal structures can be readily identified from the title deeds or public records.
Unlike other general insurance, a title insurance policy is paid for only once and the policy lasts for as long as the owners or their heirs own the property or the duration of the mortgage. Premiums range by country and situation. Please contact us for a quote.
We will consider the most cost-effective way to solve the problem. Our options include:
- We may pay the amount due under the policy.
- We may prosecute or defend proceedings to clear the claim.
- We may settle that claim with the third party.
- We may direct the sale of the property to a third party and recompense the insured for any reduction in the value that results from the defect.
The types of companies and individuals who could use title insurance as a risk mitigation tool are:
- Purchasers of real estate for investment or occupation and their lenders
- Parties packaging either direct property income (such as a REIT) or portfolios of property securities (i.e. mortgages) for securitization or bond issues
- Parties seeking to acquire or take major shares in businesses with significant real estate on their balance sheets
- Illegal use of property, physical and environmental issues
- Eminent domain, resumption or expropriation
- Risks known or created by the insured
- Claims relating to water and natural resources
- Aboriginal claims
For LawyersHow can lawyers use title insurance?
A property transaction can be delayed or even cancelled due to defects in title. Our Defective Title Insurance policy provides an alternative solution that allows lawyer's to take a more pragmatic approach to different types of title issues.
Even in cases in which the lawyer has exercised utmost due diligence, there are still some risks, such as fraud, that a lawyer cannot discover from title investigation, and many items that are excluded from the lawyer's opinion such as signature verification.
No. Lawyers still will negotiate and advise on agreements, searches and title investigation; prepare transfer documentation and mortgages; attend all executions; complete arrangements and stamp and registrations in the normal way.
For LendersWhy does a lender need a title insurance policy as well as lawyer's opinion?
If a mortgage cannot be registered in the correct priority, or if it becomes or is claimed to be unenforceable, the lender has to prove negligence before it can recover against a lawyer.
Claiming against a lawyer has risks and costs that may not always be recovered. Apart from the cost of administrative time and legal fees, there is always a litigation risk, as the lawyer may not have actually been negligent. There is also the payment risk if the lawyer is not adequately insured.
An advantage of title insurance is that it guarantees the lender will receive a valid and enforceable mortgage from the moment the loan is advanced and throughout the life of the mortgage.
Amongst the risks covered are borrower fraud and forgery, undue influence, failure to obtain independent legal advice and failure to obtain registration in the correct priority. This coverage runs with the loan, no matter how it is subsequently packaged. Coverage of enforceability issues varies across jurisdictions in Asia. Please contact us directly for specific details.