Problems With A Property Title? Insurance Could Offer The Answer
When the economy and the property markets are strong, buyers
tend to accept many problems that exist in the title deeds.
However, when times are harder, even the smallest wart in a title
can stop a property sale. Titles that are registered in the Land
Register of Scotland carry a UK Government backed indemnity, but
this only protects against some title problems, and many properties
have not yet been registered. Solicitors acting for purchasers are
even more wary of title problems in the case of a property that is
going to be registered for the first time.
The problems that can get in the way of the completion of a
property transaction include doubt as to the extent of ownership,
confusion about the boundaries of a property, a previous deed that
may not have been properly signed, the lack of, or doubtful rights
of access, and the continued existence and enforceability of
conditions. Some old title deeds have hopelessly vague descriptions
of the property, so that nobody really knows what and how much is
owned. There may be issues about the right to lead electricity
cables and water pipes etc into the property, and drainage and
sewerage from the property. The title may contain a right in favour
of someone else to carry out mineral operations underground and to
remove support for buildings, without having to pay compensation to
the owner of the property.
Defective title indemnity policies can help in all of these
situations. While they do not cure the problem in question, they do
give financial indemnity so as to allow people to accept the risk
involved. The premium is a single payment and the policy will pay
out if loss is suffered due to the defect. The policy is issued for
the benefit not only of the owners of the property, but also their
lenders and their tenants. In fact, many lenders will only proceed
with their loan if a defective title policy is obtained.
It may not always be possible to find out who can solve the
title problem or to locate them. Likewise, it may not be possible
to establish who is entitled to enforce a continuing title
restriction. Making an educated guess as to who can solve the title
problem may present a solution, but it is not always desirable to
approach that person, as their price for co-operation may be
astronomical. It could even be harmful to the prospects of getting
insurance cover to approach this person, or whoever owns the area
in question.
Policies for residential property with cover of up to
£250,000 and...
To continue reading
Request your trial