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July 20, 2015

Title Insurance: What and Why

In our legal system, when a person buys a property, he/she actually buys the “title to the property”: the right of use and occupation of it.

But it could happen that a third party takes legal action against the use and enjoyment of this title, based on various expected or unexpected factors. To protect the property of that risk, there is a ‘Legal Guarantee of the Title’/ ‘Title Insurance’: an insurance that could provide invaluable protection in the event of a problem with title.

What factors could threaten the title?

There are certain peculiarities of the property that could become a future threat. How many conveyancing processes haven’t been successfully completed because the property contained an irregularity? For example, a magnificent but unlicensed pool, an illegal extension of the kitchen which could lead to problems if a third party filed a complaint, a house without License of First Occupation …

 

No matter how deep the “due diligence” is, there are many hidden defects that the real estate bubble left in many properties of Andalusia and Spain, which could lead to administrative sanctions by the town hall, lawsuits, demolition orders …

And there are also unpredictable risks such as legal defects, notarial and registry errors; urban conflicts; … easements, etc., that can appear even years after the acquisition by the owner.

These risks should not block the purchase decision. You can provide security to the buyer through the Title Insurance: it provides an additional and complementary guarantee. This insurance benefits seller and buyer, real estate agency, intermediary lawyer, the developer or the bank.

Title Insurance protects the title by offering legal defence against any of the contracted risks, legal support, expenses cover for fines and penalties, it could also cover demolition costs, and even compensate for the loss of value of the property as a result of an action of the council (for example, if you are forced to demolish your illegal pool, the insurance will cover the costs of demolition and the sanctions, if any, and will compensate for the loss of value of your property -now left without pool-).

You can buy the insurance under “One Specific Risk” or in “All risks” condition, which includes 18 possible scenarios.

The Title insurance is not expensive (€ 1.200 for 10 years cover on a home valued at €300.000), and it will give you added Protection from unknown risks. Prevent an unpredictable damaging the conveyancing.

The insurance has an annual premium and is valid for 10 years renewable.

For more information, send us an email or call us here: (0034) 952 882 273.

Conveyancing, Title insurance
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