The importance of Title insurance, how does it help a housing society?

What is Title Insurance?

To protect the buyer of the property, be it a house, land or even a developer who buys land, an insurance company agrees to compensate the purchaser against any loss caused by a defect in the title of the seller in the property.

Under title insurance, you will be paid by the insurance company for any loss in the market value of the property in respect of costs you may incur because of the defect in ownership. At the time you purchase the title insurance, the title defect may be present and that is not known to either the insuring or the insured.

Why Title Insurance is Important?

Section 16 of RERA Act 2016 needs all builders to buy title insurance to undertake anew project also to pursue projects which are unfinished as at the time the law is passed. This provision would help reduce the suffering for innocent flat purchasers if any flaws in the title of the building land are found.

Title Insurance On Completed Projects.

With the fact of price hikes for residential houses, it is vital for the buyer to have an assurance that the title is correct. The builder is required to buy insurance for land and building titles according to the provisions of the RERA prior to moving the plan to the housing society or group of the allottees. The developer must also give the society/association the documents of the insurance. Therefore, purchasers of apartments built after the implementation of RERA must provide title insurance while flat owners who bought the apartment before the enactment of this law, have no title insurance.

The society needs to buy title insurance immediately to protect its members’ interest because the land is usually owned by the housing society and not by the individual flat’s owner. Since the costs of the construction of an apartment are smaller than the costs of the land, the purchase of title insurance in relation to the land that is owned by the society for housing companies is more important.