Title insurance of real estate and its value. What is title insurance?

According to the current legislation, the property right allows the owner of the property to own it and dispose of it at his own discretion. However, in some normative acts, there are grounds for the possibility that this possibility may be lost or challenged. As a result, the object will be claimed from the owner. To avoid this situation, the law provides title insurance for real estate. Consider what it is.

General information

Title insurance of real estate represents protection from the risk of material losses that can arise from a bona fide purchaser in connection with the loss of ownership. Such a threat appears in case of detection of defects in the documentation. The legal title refers to the actual paper that confirms the exclusive right to own property.

Causes of risk

Real estate is often the subject of a long chain of sales transactions. If it turns out that one of them was committed once in violation of the law and can be challenged (for example, by heirs), then, in accordance with the court's decision, the ownership of subsequent owners is canceled. This can arise if, for example, the privatization of an object did not take into account the opinion of a minor, or one of the owners stayed in places of deprivation of liberty. This situation is typical for secondary housing. In the primary market, loss of ownership occurs when the developer attempts to sell one apartment to several purchasers.

Why defend against risk?

Title insurance of real estate transactions acts as a guarantee for a bona fide purchaser if the object is claimed from the owner. The main circumstances under which this can happen are:

• Conclusion of the contract of sale with the participation of incompetent legal entities or incompetent citizens, with violation of the norms of legislation.
• The right of ownership after the alienation of the object remained with third parties, and so on.

Title insurance is one of the requirements of a number of banks that issue loans to individuals for the purchase of housing. Protection against the risk of material losses is a mandatory item when obtaining a mortgage.

Subject of the contract

Title insurance can be issued for residential or non-residential buildings, parts of buildings or premises, land. In addition, it is possible to protect the property interests of the owner. The subject of insurance in such cases is the right to dispose, own and use real estate.

Invalidity of the contract

Title insurance includes several cases in which the owner is given the opportunity to protect their rights. As such an event, for example, is the adoption of a court decision. Upon its entry into force, the rights of the owner are canceled. One of the special cases is the recognition of the invalidity of the contract of sale. A transaction can be considered as such if:

1. Contravenes legislation and other normative acts.
2. It is concluded in opposition to the fundamentals of morality and law and order.
3. Covers another deal.
4. Does not imply any legal consequences.
5. Made by a limited or completely incompetent citizen or an incapable legal entity.
6. It is concluded by a minor, whose age is from 14 to 18 liters.
7. Done under the influence of error.
8. It is carried out by the capable person who was not aware of his actions and is not able to control them.
9. It is concluded under the influence of threat, violence, deception, malicious agreement, heavy circumstances.

Title insurance of real estate: cost

The amount is determined taking into account various factors. There are the following criteria that provide for title insurance:

• The price of the object in accordance with the contract of sale.
• The cost of evaluating BTI.
• Market (actual) cost of the area at the date of insurance.
• Other factors. For example, they include the size of the loan on the security of the living space.

The amount of insurance should not exceed the actual value of the object. During the validity of the contract, its size may be changed. For example, if the owner carries out major repairs, it can be increased in proportion to the cost. The owner is paid compensation equal to the amount under the contract for title insurance of the apartment. The cost of lost property is not the only payment that is provided for the occurrence of relevant circumstances. Compensated also court costs, payment of a lawyer representing the interests of the owner. The amount of the sum, among other things, is affected by:

• Term of the insurance contract.
• The level of risk, which is established by legal expertise.

In accordance with the insurance period when protecting against all threats, that is, if you lose ownership for any of the above circumstances, the tariff will be:

• For the year - 0.4-1%.
• Three years - 1.5-2%.
• Ten years - 2.2-4.0%.

Thus, the contract can be concluded for a period of 1 to 10 years. According to the domestic legislation, purchase and sale can be challenged within three years, and in some cases this period may increase to ten years.

Subjects of law

Title insurance is available for legal entities, individual entrepreneurs and citizens who own property. In this case, they must be registered in the territory of Russia. The first stage before the direct conclusion of the insurance contract will be the collection of all necessary securities relating to the transaction. On the basis of these documents, the possibility of submitting claims to an unscrupulous new owner will be assessed. In accordance with the level of risk, the insurer will calculate the tariff. The next stage will be the choice of the company with which the contract will be concluded. At the same time, it is necessary to carefully study the permitting documents of firms (licenses), their financial status. In addition, you should first acquaint yourself with the rules and conditions for the provision of their services. From the list you will need to choose the most suitable company. At the final stage, a contract is prepared and agreed upon. To conclude it, you need a personal presence of the owner in the office of the company. As a general rule, one copy of the document remains with the representative of the company, the second is transferred directly to the owner. In the event of an insured event, documented evidence of the events that occurred should be provided in order to receive the compensation due.