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...

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