Title insurance (or title insurance, title insurance ) - insurance of the risk of material losses that a bona fide purchaser may incur due to loss of property rights to a property (building, apartment, land plot) resulting from a defect in title (proof of ownership of real estate) [1] .
Legal title (in insurance) is a document proving the legal and exclusive right to own property [2] .
The object of insurance for title insurance is the property right of a bona fide purchaser of a particular property . Real estate is often the object of long chains of sales transactions. If at some point it turns out that one of these transactions (completed a long time ago) was made with violations of the law and could be challenged (for example, by the heirs), then by a court decision the ownership of all subsequent purchasers may be revoked.
The loss of ownership of an apartment acquired in the secondary market may occur if, at some time during its privatization , the rights of minor children were not taken into account or if one of its owners was in prison at the time of the transaction. When buying a home in the primary market, a loss (defect) of the title may occur if an unscrupulous developer sells the same apartment (or the same house) to several buyers [3] .
Possible reasons for the loss of title:
- violation of the rights of third parties (minor children, unrecorded heirs , previous owners, etc.);
- illegality of previous transactions;
- falsification of documents required for the transaction;
- fraud ;
- registrar errors;
- incapacity of parties to transactions;
- unauthorized court decisions.
One of the typical situations when title insurance is used almost always is the issuance by the bank of a mortgage loan for the purchase of real estate (apartment, house) in the secondary market. In this case, the bank usually requires not only insurance of the pledged object against fire , but also title insurance [3] .
The typical size of the tariff rate for title insurance is from 0.5% to 1% of the sum insured (property value) [4] .
Links
- Title insurance - media publications
- Kupreishvili B.Yu. Title insurance and alternative ways to protect the right to property . "Finance" № 8 (2006).
Notes
- ↑ Title Insurance // Insurance and Risk Management: Glossary / Comp.: V.V.Tulinov, V.S.Gorin. - Moscow: Science, 2000. - Stb. 389 - 565 s. - ISBN 5-02008-388-7 .
- ↑ Legal title // Insurance and risk management: Terminological dictionary / Comp.: V.Tulinov, V.S. Gorin. - Moscow: Science, 2000. - Stb. 367 - 565 s. - ISBN 5-02008-388-7 .
- ↑ 1 2 Gavrikova, Valentina. Mortgage bill: what risks are insured when making a loan for real estate . Rosbusinessconsulting (August 5, 2013). - Insurance of mortgage risks is a prerequisite for a housing loan. And this is not a whim of credit institutions, but a requirement of Russian legislation, spelled out in the Federal Law “On Mortgage (Real Estate Pledge)” of 07/16/1998 No. 102-FZ (current version as of May 19, 2013). However, in fairness it should be noted that, in accordance with the law, it is only necessary to insure a pledge - an apartment or a house against partial or complete destruction. The appeal date is April 26, 2014.
- ↑ Adamchuk, Olga. Insurance in every house . RBC Daily (October 31, 2013). - Real estate insurance is insured by Russian insurers not at the fastest pace (according to the largest companies, in 2012 the increase in premiums for this type of insurance was 12–14%). Not long ago, insurers did not even hope to sell insurance to every home, but now the situation is beginning to change. The Federal Financial Markets Service (FFMS) intends to explore the possibility of imposing home insurance. The appeal date is April 26, 2014.