So, there you are, in the middle of buying (or selling) a property – but oh no, there’s a problem that is not easily fixed. Your solicitor suggests that you proceed with Title Insurance (or a Title Indemnity Policy, as it is sometimes called). It’s almost like magic – problem solved!
Not quite. However, it is a very common solution and if you are planning to buy or sell, there is always a chance that you will encounter a policy in one way or another. In this blog, I intend to explain what they are, their purpose and give you an idea of when they are (and more importantly, when they aren’t) appropriate.
What is Title Insurance?
Title Insurance is – wait for it – a type of insurance which conveyancers will often suggest as a solution to various issues which could become problems.
The idea is that rather than fix or address the issue, an insurance policy is put in place which is designed to protect various parties (usually purchasers, but often policies will be put in place to protect mortgage lenders). The idea is that whilst the issue in question continues to exist, the policyholder can make a claim on the insurance policy if the issue ever becomes a problem. This should allow them to recover any losses that they incur as a result.
What does Title Insurance cover?
There is a very wide range of issues which these policies can cover. Like most insurance companies, Title Insurers will usually provide a list of common scenarios for which cover can be put in place relatively easily. However, even if your issue is not one of the common scenarios, insurers will usually assess the situation and provide a bespoke policy if necessary.
The costs will vary depending on the level of risk and the complexity of the issue, but Insurers will usually do their best to provide you with cover no matter your issue. However, that doesn’t mean that you should take it!
When is Title Insurance appropriate?
Title Insurance policies can usually be obtained quickly, easily and depending on the issue can be relatively inexpensive. For these reasons, they are often the first port of call for many problems. However, they are quick, easy and cheap for a reason – because they do not solve the problem, they are a sticking plaster. For this reason, Title Insurance is generally only appropriate where the issue in question is relatively low risk.
If there is an issue which is considered to be low risk a conveyancer may suggest using Title Insurance. This will be even more likely when an issue is going to be very difficult or expensive to address. It may be the case that it is more time and cost effective to proceed by way of Title Insurance. One thing you should note is that you must never disclose the existence of a Title Insurance policy as this is likely to invalidate the cover.
How will I know whether to accept Title Insurance or not?
We here in Blackadders’ Residential Conveyancing team will guide you from start to finish through any transaction you have, including any questions about Title Insurance and the risks involved with taking out such a policy. Get in touch!
If you are thinking of buying or selling a property within Scotland, please contact a member of the Blackadders Residential Conveyancing Team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.