Title insurance when buying an apartment: registration of the policy, conditions

Today we will consider a rather interesting issue - title insurance of real estate. What is it and what is it for?

First of all, this topic may be of interest to those people who plan to invest in real estate. If in the near future you plan to purchase an apartment, a house or a holiday plot - title insurance can save you from many troubles.

The fact is that when you buy a home, the ownership of which has repeatedly changed the owner, you put yourself in a dangerous position. Your right to the acquired property can be at any time challenged by one of the previous owners. There are many grounds for this. Insurance title is just designed to protect you from such risks. Let's understand more.

What is title insurance

So, what is meant by the term "title insurance of real estate"? What it is? This is the name of an insurance product that provides protection against the risk of losing the right to property if the transaction is challenged and declared invalid. It is interesting that such a policy protects a person not from what may happen in the future, but from the possible consequences of what has already happened. At the time of drawing up the contract of title insurance, such events are not known to any of the parties and do not manifest themselves in any way.

The name of the described policy is derived from the phrase "legal title", which means a document confirming the exclusive ownership of a particular property.

To date, such contracts are often concluded simultaneously with the contract for real estate insurance. Such property is often the object of long legal chains. The same apartment can be sold several times, become an object of donation, alienation in any way, inheritance and transfer from hand to hand, based on the decision of the judiciary. If legal inaccuracies were committed at any of the listed stages, not only this particular transaction, but all subsequent ones, can be challenged and declared invalid. As a result of such actions, the current owner of housing is deprived of the rights to the acquired property. Title insurance, the reviews on which the most positive, just protects the owner from such a risk.

Why it is necessary

The main result that a person receives from this type of service is compensation for losses incurred in the event of loss of ownership of the purchased apartment, house or dacha. In addition, the contract may provide for other compensation associated with the compensation of additional losses associated with the insurance event.

The insured event hereby recognizes the documented fact that you have suffered real damage associated with the loss (in whole or in part) of the property right to housing. At the same time, the events arose regardless of your will and on the basis of a court decision that has already entered into force.

What does title insurance protect?

Acquisition of any property, especially housing, requires a balanced and responsible approach. It is important to take into account every detail, all possible troubles. According to official statistics, just over one percent of transactions concluded in real estate are recognized as invalid by the court. It seems to be a bit, but this is if the matter has not touched you personally.

The reasons for the challenge may be different. For example, during privatization, the interests of the child were not taken into account. This is already the reason to challenge the deal. And you can do this even after two or three years.

Since fraudulent schemes are most often affected by housing, title insurance when buying an apartment will be a guarantee that your blood will not move into the pockets of "black" realtors.

Of course, before the deal is concluded, it is worthwhile to carefully check out the details of the purchased housing. But this can be very problematic. The fact is that archives most often refuse to provide data on all transactions previously made with property. They motivate their refusal by the fact that the data about the last owner is supposedly enough. In practice, this is far from the case. A much earlier owner may appear, and then the rights of all subsequent owners, however much they may be, will be declared invalid by the court. That's why title insurance makes the buying and selling process much safer.

When a transaction can be challenged and declared void

There are several situations in which the conclusion of a transaction can be considered void:

• At registration were presented with forged documents;
• The acquired object is seized due to the existence of outstanding debts of one of the previous owners;
• The apartment was not bought from the true owner;
• The seller kept silent about the disagreement of his "second half" on the deal;
• The heirs of one of the former owners claim the purchased housing.

In some other cases, apartment title insurance can also protect a new owner from loss as a result of loss or restriction of ownership:

1. At the time of the transaction, the seller was a minor, suffered from a mental disorder, or was limited in legal capacity.
2. The documents were drawn up in violation of the current legislation.
3. The rights of the trustee have lost force, in cases where the transaction was not made personally by the seller.
4. The deal was fraudulently concluded or under the influence of violence or threats.

How much does it cost

So, you decided to issue title insurance. How much does such a policy cost, and on what does its value depend? The amount of insurance is accepted on the basis of agreement of the parties. Most often it corresponds to one of these parameters:

• Market (real) value of housing at the time of signing the contract;
• The cost of purchasing such a dwelling (cost of substitution);
• Replacement cost, that is, the amount necessary to build the same object;
• The amount specified in the loan agreement (if any);
• Of the cost of housing under a contract in accordance with which the ownership was obtained.

What affects the size of the insurance tariff

The payment that you will have to pay as an insurance also depends on several parameters:

• The amount of the sum insured;
• The number of risks recorded in the contract;
• The history of the house or apartment (the number of former owners);
• Availability of the franchise and its size;
• Features of the regulatory framework that existed at the time of the conclusion of previous transactions or privatization;
• Period of validity of the policy.

Depending on all these factors, the tariff for title insurance can be calculated in the amount of 0.1 to 5% of the insurance amount. It all depends on the terms of the contract.

Design rules

This type of insurance is relevant not only in the case of buying a home in the secondary market. Title insurance will also protect you when buying a home in a new building. For proper registration of the contract you need to prepare:

1. A document confirming the ownership of the object (purchase, donation, inheritance, etc.).
2. Certificate of state registration.
3. Technical passport of housing.
4. Extract from the house book.
5. The plan of the house or the land plot (if it is a question of insurance of these objects).

What to do in the event of an insured event

If there has been a situation where title insurance is still useful, you should immediately notify your IC of this. You need to personally arrive there and in the shortest possible time to provide such documents:

• A civil passport or other document proving your identity;
• Current contract of title insurance;
• The original and a copy of the court decision establishing the fact of alienation of the acquired property.

After a thorough examination of the documents, the UK is obligated to pay you the entire amount under the contract. In addition, if an item has been included in the insurance for compensation of other expenses, for example, legal costs, this money will also be reimbursed to you.

Features of insurance

To my great regret, the contract for title insurance is not very popular in our country. Moreover, many people do not even realize that such an opportunity exists. Therefore, when concluding an insurance contract, mistakes are often made, the presence of which leads to serious consequences in the event of an insured event.

When signing a contract, you should pay attention to the following points:

1. It is not necessary to sign a contract, in which there is an exhaustive list of insurance risks. There is a high probability that some situation will simply not be taken into account, which will subsequently lead to a refusal to pay. It is best if the contract specifies that the loss of ownership is subject to compensation regardless of the reason.
2. Some UKs offer a policy in which it is stipulated that reimbursement relies only on transactions made with your direct participation. This can also negatively affect the receipt of payment.
3. Quite often, when concluding a real estate transaction, the contract prescribes a much smaller amount than it actually is. This is done in order to minimize the tax rate. Therefore, with title insurance it is very important to enter into the contract the actual amount of the transaction, and not the one that is prescribed in the contract of sale.

The subtleties of title insurance for a mortgage

Quite often, along with the registration of a mortgage, banks require the client to issue life and health insurance. This is not surprising, because the bank is interested in receiving their money in any case. Nobody usually insists on title insurance, because it is not the bank that is interested in it, but you yourself. After all, even if the purchase is declared invalid, the bank will have to return the money to you.

By the way, title insurance for a mortgage is very beneficial to the buyer. After all, before the conclusion of the contract, the insurance agent must carefully check all the nuances of the transaction and, in case of which, provide the client with a qualified lawyer. In general, do everything possible to avoid the occurrence of an insured event.

Insuring the title of the mortgage, you need to remember that the contract should be entered into an amount not less than what you have to pay in the end. And the insurance contract itself should be concluded for the same period.

When does insurance not help?

Title insurance is not an absolute panacea. Unfortunately, there are risks in which it does not work. If after the purchase of housing there is an encumbrance not related to loss of property, the title policy will not help you. What does it mean?

Here is a small example. You bought an apartment, and three years later it turned out that another person (without ownership) was registered in it. At the time of the transaction, he was absent (for example, he was in prison or was on earnings abroad), and now he is back. If he has nowhere to live, then, in accordance with the fortieth article of the Constitution of the Russian Federation, he will have the right to reside in your home. In this context, the situation will not be recognized as an insurance event, since no one claims to own property at all.

So do not count on title insurance, as a panacea for all ills. In order to avoid unpleasant situations, it is necessary to put on your own the maximum amount of effort to protect yourself against all risks.