Title insurance provides protection against financial losses from defects in real property titles and protects buyers from issues like prior liens or claims on a property's title. While common in countries like the US and Canada, title insurance is still emerging in India. The Real Estate Regulation and Development Act of 2016 made title insurance compulsory for developers to protect stakeholders' interests. Currently, HDFC Ergo is India's major title insurance provider, while other insurers are partnering with international title insurance companies. Title insurance can make real estate transactions safer for developers by covering defense costs and undiscoverable title defects. It is recommended that developers obtain title insurance to market their projects better and enhance valuations for loan purposes, even if not legally required for certain

1. Land Title Insurance
A GAME CHANGER FOR REAL ESTATE MARKET IN INDIA

2. Index
1. Concept
2. History
3. Need
4. Provisions in other countries
5. Provisions in India
6. Is it mandatory?
7. Service Providers in India
8. Advantage
9. Recommendation

3. 1. Concept -
Title insurance is a form of indemnity insurance commonly found in the United States and Canada
which insures against financial loss from defects in title to real property and from the invalidity or
unenforceability of mortgage loans. Title insurance will defend against a lawsuit attacking the title
or reimburse the insured for the actual monetary loss incurred up to the amount of insurance
provided by the policy.

4. 2. History -
 Prior to the invention of title insurance, buyers in real estate transactions have to rely on the assurance
given by the seller about the validity of the land title held by the seller. If the title were later deemed
invalid or found to be fraudulent, the buyer lost his investment.
 In 1868, the case of Watson v. Muirhead was heard by the Pennsylvania Supreme Court. Plaintiff
Watson had lost his investment in a real estate transaction as the result of a prior lien on the property.
Defendant Muirhead, the conveyancer, had discovered the lien prior to the sale but told Watson the
title was clear after his lawyer had (erroneously) determined that the lien was not valid.

5. The courts ruled that Muirhead (and others in similar situations) was not liable for mistakes
based on professional opinions. As a result, in 1874, the Pennsylvania legislature passed an act
allowing for the incorporation of title insurance companies.

6. Joshua Morris, a conveyancer in Philadelphia, and several colleagues met on March 28, 1876 to
incorporate the first title insurance company. The new firm, Real Estate Title Insurance Company
of Philadelphia, would "insure the purchasers of real estate and mortgages against losses from
defective titles, liens and encumbrances," and that "through these facilities, transfer of real estate
and real estate securities can be made more speedily and with greater security than heretofore."
Morris' aunt purchased the first policy, valued at $1,500, to cover a home on North 43rd Street
in Philadelphia.

7. 3. Need-
Title insurance is different from other kinds of insurance. Its sole purpose is to prevent losses and
eliminate risks that can be caused by defects in a property title, defects that occurred in the past.
The title insurance company examines risks and mitigates them before the deal closes and the land
changes hands. Land buyers may mistakenly believe that a deed is proof positive of ownership. A
deed is only a document through which ownership rights in land are transferred. A deed does not
eliminate any rights that other individuals or entities have in the property. Title to the property can
be clouded with claims and liens. Title insurance protects the buyer's interest in the property he is
purchasing.

8. 4. Provisions in other Countries -
Title insurance is available in many other countries, such as Canada, Australia, the United Kingdom,
Mexico, New Zealand, Japan, China, Korea and throughout Europe. However, while a substantial number
of properties located in these countries are insured by U.S. title insurers, they do not constitute a significant
share of the real estate transactions in those countries. They also do not constitute a large share of U.S. title
insurers' revenues. In many cases these are properties to be used for commercial purposes by U.S.
companies doing business abroad, or properties financed by U.S lenders. The U.S. companies involved buy
title insurance to obtain the security of a U.S. insurer backing up the evidence of title that they receive from
the other country's land registration system, and payment of legal defense costs if the title is challenged.

9. 5. Provisions in India-
 Though there is doubt about the implementation of The Real Estate Regulation and
Development Act, 2016 (RERA) However, there is one good thing that has been introduced by
RERA is title insurance.
 It was last year when Insurance Regulatory and Development Authority of India constituted a
seven-member committee to study the scope of such policies in the Indian market. The policy is
designed in a way to safeguard financial interest of real estate owners, investors, lenders against
property issues. Real Estate Law specifically talks about the importance of project insurance to
safeguard stakeholders' interest in the case of land-related dispute.

10. 6. Is it mandatory?
As per RERA 2016 it is compulsory for the developer to avail title insurance of land on which
project is to be developed.

11. 7. Service Providers in India-
At present HDFC Ergo is providing Title Insurance in India and , Bajaj Allianz and ICICI
Lombard are in talks with First American Title Insurance Company to offer reinsurance support.
Marsh is another global service provider offering title insurance in collaboration with National
Insurance Company Ltd and New India Assurance Ltd.

12. 8. Advantage-
It makes real estate transaction safer for the developer, covers defense cost it also covers
undiscoverable defects such as errors in searches and historic documents which cannot be
discovered via a full diligence process. Due- Diligence by service provider’s lawyer will be a second
filter for developer and it will help to understand undisclosed risks in title.

13. 9. Recommendations-
It is not compulsory to take cover of Title Insurance by developer of a project which is not coming
under RERA but it is advisable to take cover of the Title Insurance for projects, as we can use it as
a marketing weapon not only that but it will help us to enhance valuation of our project for loan
purpose.

14. Thank You…