Property loss insurance. Title insurance of real estate what is it. Why is it needed

They constantly talk about the need to carefully check the history of the apartment, but in reality, even professional realtors and lawyers cannot guarantee that no one will ever encroach on the buyer's property rights. It is believed that title insurance can be used to protect against loss of property rights - .. In any case, in its current form.

How property rights are deprived

According to Boris Sharonov, director of the NSKA risk department, about 2% of transactions per year are terminated by court decisions as a result of various claims. Ownership can be challenged in many cases. These may be mistakes made when registering past transactions, or, for example, cases when the owner's rights are presented by a person whose rights were violated during the privatization or alienation of real estate: for example, at that time the person did not reach the age of majority, or was in prison, or was sick and incapacitated.

Also, the basis for claims may be the presence of a fake or forged power of attorney in the past in any of the transactions, transactions under fake or forged documents, transactions by incapacitated persons or persons who were under the influence of delusion, deception, violence, a combination of difficult circumstances or by persons who are unable to understand the meaning of their actions or to direct them, transactions with violation of the rights of co-owners of real estate or heirs and other defects in property rights.

It is possible to lose an apartment if the seller suffers from mental disorders and is recognized as legally incompetent in accordance with the established procedure, the acquired property is under judicial arrest due to the debts of the former owner, as well as as a result of fraudulent activities.

Title insurance

The mechanism designed to solve the problem is title insurance, which protects the interests of the owner in the event of an unexpected loss of the apartment. The insured risk in this case is the loss of the property due to the termination of ownership for reasons beyond the control of the policyholder. The insurance covers the agreed amount (usually the market value of the apartment at the time of the transaction), and the title insurance contract may also cover the costs of doing business in court.

The first title insurance policy in Russia was issued in 1994 by Standard-Reserve. However, according to Boris Sharonov, there was no official title insurance until 1998, when insurance companies, including, in particular, Standard-Reserve, Rosgosstrakh, Leader, ROSNO, Spasskiye Vorota, etc. received the first licenses for title insurance.

The expert gives an example from insurance practice: in 1995 a businessman disappeared; many years later, his daughter, having received with the help of certain "professionals" a certificate of his death and a will in her favor, sold her father's apartment. “Subsequently, the transaction was contested by the relatives of the wife of the missing owner. Fortunately, the new owner of the apartment had a title insurance policy, he managed to defend the apartment with the help of a lawyer from the insurance company, ”says Boris Sharonov.

Title insurance received an incentive to develop only with the arrival of mortgage lending. Banks, aware of the existence of title risks, insisted that borrowers insure the risk of losing property rights when obtaining mortgage loans. Today, most insurers are engaged in title insurance only within the framework of cooperation with banks, and rely mainly on the results of a bank check of the borrower and the purity of the transaction, therefore they conclude such contracts almost automatically. However, it should be borne in mind that the insurance compensation in this case will be received by the bank, and not the buyer of the apartment. That is, in any case, he will lose his property, the bank will receive insurance, and the maximum that a person can claim is the difference between the insurance payment and the balance of debt obligations to the bank.

When they can refuse

According to Tatiana Saksontseva, Managing Partner of Miel-Network of Real Estate Offices, insurance companies sometimes refuse to conclude a title insurance contract due to a high-risk history of transfer of rights to real estate: recent inheritance by will, incorrect determination of shares, double sales of apartments in new buildings, violations the rights of minors in privatization.

They can also refuse to insure an apartment that came into ownership under an annuity agreement, especially if less than a year has passed since the death of the annuity recipient, in case of inheritance by distant relatives, sale by proxy.

It should also be borne in mind that the insurance applies only to cases when the circumstances for the payment of compensation arose independently of the insured. If there was a transfer of the acquired property to other persons under a paid or gratuitous contract (even if the person was misled), he will not receive the insurance payment. In addition, payment may be refused if the insured object is used for other purposes (for example, if a residential apartment is used as an office), if there has been a change in the characteristics, properties, design parameters of the real estate object, if the object is subject to seizure from the policyholder (for example, by fiscal authorities) ...

Underwater rocks

There are also not so obvious nuances. The first problem is timing. Most often, an apartment is insured for three years - the statute of limitations for claims in relation to real estate transactions is three years. However, firstly, in some cases, the term can be extended up to 10 years, and secondly, the plaintiff may insist in court that this period should not be counted from the moment the transaction was concluded, but from the time when the plaintiff learned that his rights were violated. “And he can find out, appear on the doorstep and threaten with a court in 10 or 20 years,” says Boris Sharonov. Paying insurance for all these years is very expensive. The cost is usually 0.2-1% per year, and in particularly difficult cases it can reach 5%. That is, it is tens of thousands of rubles a year for the budget.

Another important point is that insurance will not always cover the risks that the buyer thinks about when concluding an agreement with the company. “Unfortunately, title insurance is not a panacea, since insurance companies often exclude from insurance coverage the occurrence of an event that led to the occurrence of an insured event before the conclusion of an insurance contract, and an insured event during the period of the contract,” warns the general director of the Finance Real Estate agency Elvira Dadasheva. - This means that if the reason why the owner can lose ownership due to claims of third parties arose before title insurance (and this is mainly the case), and the insured event occurred already during the period of ownership, then the insurance company will not compensate for anything. " Previously, such cases were very common and, in fact, were an indicator of the bad faith of insurers - after all, in this case, insurance practically loses its meaning. Now, most often it is events in the past that are insured, but you need to carefully read the contract.

"In addition, the insurance company may challenge the fact that the loss of the property was due to reasons beyond the control of the policyholder, stressing that the buyer did not check the documents well enough, for example, did not request a certificate of the seller's legal capacity," says the lawyer, president "Guild of Lawyers of the Real Estate Market" Oleg Sukhov. Therefore, title insurance does not eliminate the need to check the documents and history of the apartment.

Since title insurance is intended to protect the buyer only from the risks associated with the loss of ownership of the purchased property, in the event of an encumbrance, it does not apply. For example, you bought an apartment, lived in it for a certain time. Suddenly, a person who has been released from prison appears on the doorstep. Even if he never owned your living space, but was once registered in the apartment, he has the right to live in it, according to Art. 40 of the Constitution of Russia, provided that he has no other home. In this case, title insurance does not work as no one claims your ownership. And you have to share your home with a stranger.

Abroad

Abroad, the practice of title insurance is more widespread and provides more guarantees. First of all, thanks to a clearer definition of the concept of "title". In Russian legislation, it essentially does not exist; it is not the title as such that is insured, but the risk of loss of property.

In Europe and the United States, almost all real estate transactions involve title insurance. According to Igor Indriksons, real estate investment manager and founder of the Indriksons.ru portal, in the United States, an object is insured once for the entire life of its owner and the insurer pays the client the amount necessary to purchase the same housing at the time of the insured event. Recall that in Russia the amount of insurance is fixed (that is, it does not take into account possible changes in prices on the market) and the contract is concluded for a certain period.

In Canada and Germany, there is not title, but act insurance - that is, guarantees are given not by an insurance company, but by the state. Something happened - the state pays, and then it itself deals with the violators and collects money from them. The fee is paid in a lump sum at the time of the transaction and usually does not exceed 1-2% of the cost of housing. And, for example, in Austria, the payment for the state guarantee is quite symbolic - 0.15% of the value of the object.

According to experts, the best way to increase the effectiveness of title insurance is to make it lifelong, as the risks of deprivation of property can arise at any time. However, in Western countries, where the history of an apartment is more transparent, and the mechanisms for protecting the rights of owners are better established, it is actually more difficult to lose the rights to an apartment. Therefore, inexpensive options for life insurance are possible. In Russia, such insurance will be very expensive.

Property raised, one might say, a perplexed question: "What is title insurance and why is it necessary?" Protection of the loss of title to any real estate, especially those purchased on the secondary market, is considered necessary. This is no less important than insurance directly for the apartment itself or at home.

It is not at all worth considering this measure as another way to squeeze money out of the participants in the process. This technique is considered reliable financial protection.

What is title insurance?

By purchasing real estate, any buyer also receives the title of owner. It is his loss, along with the right to purchase property, that is the subject of this type of insurance.

A bona fide buyer of real estate will not be financially protected if circumstances are discovered that would invalidate his transaction with the seller.

In the event that previous agreements with real estate were carried out with any violations, the buyer will lose both the purchase and the money paid for it, which no one will return to him.

Voluntarily or compulsorily?

Title insurance can be provided on a voluntary basis. It is not always fulfilled at the request of the banking institution that issues mortgage loans.

Title insurance makes it possible to reduce the risks of any adverse consequences that are likely in the future. The events have already happened, but they are unknown to the buyer of the property at the time of the transaction.

This is especially true if the property has already gone through a series of purchase and sale transactions. It is extremely difficult to independently check their cleanliness.

The insurance company, immediately before the conclusion of the agreement, necessarily conducts such an inspection in order to determine the degree of risk. Actually, the price of the service will depend on this.

What is title insured?

The title presupposes, first of all, the insurance of ownership not only to a house or apartment, but also to a land plot. The same applies to non-residential premises along with construction in progress and the like.

The subject of protection can be not only secondary housing. Many people ask the question of why title insurance in a new building. Any owner can lose a new apartment as a result of fraudulent actions on the part of a developer who has sold, for example, a building erecting house twice.

This type of insurance is not subject to all kinds of unauthorized and illegally erected buildings or premises that were withdrawn from the housing stock or built with one or another violation of safety standards. This category includes emergency housing.

Insured event occurrence

The question of what it is - title insurance became clear thanks to the material already presented. What other categories are characteristic of this phenomenon?

An insured event in this situation is the termination of the rights to own property. The immediate event that leads to special payments is a court decision on the recognition of a previously completed transaction for the purchase and sale of real estate or the documents on the basis of which it was carried out as invalid.

The reasons why the court has the right to cancel the transaction are the following factors:

• She was committed by an incompetent citizen.
• The deal with the common property was carried out by one of the spouses without the consent of the other.
• The agreement is enslaving in nature, that is, it was committed under threat.
• The deal was made fraudulently or illegally. For example, an annuity payer without obtaining the necessary consent of the recipient. Or when the proprietor of the owner could exceed the authority, and so on.

• In any situation involving fraud.
• The transaction was carried out by a person who does not give account of his actions.
• The rights of any unaccounted heirs were violated.
• Errors were made during the paperwork.

The title insurance contract may provide for another event that leads to the loss of the owner's rights. Such an incident is the decision of the authorities to confiscate or nationalize, as well as to destroy the property that was the subject of the transaction.

Rates and cost of title insurance

The cost of title insurance directly depends on a number of the following factors:

• Whether the property is a resale or a new home.
• The amount of insurance. That is, the market price of the insurance item.
• The number of purchase and sale transactions that have been carried out with real estate over the entire period of its existence.
• The insurance period, for example, is from one to ten years.
• Underwriter's conclusion.

What is an underwriter?

The subject in question is an employee carrying out risk assessment within the framework of accepting a specific object for insurance. The underwriter assesses the possibility of special cases. Depending on the conditions of the process, the person concerned determines the rates and how much title insurance costs.

It is interesting to note that the procedure for title insurance of an apartment in new buildings, as a rule, is not expensive. Many companies do not even apply decreasing coefficients, but separate options for insurance rates for new homes and secondary real estate.

The more transactions have been made for the entire time, the higher the multiplying coefficient will be. The underwriter can issue an opinion on the increase in the price of insurance. In addition, this person decides on the use of decreasing coefficients.

The larger the sum insured and the term, the more expensive the service will be. In general, as practice shows, the average rate on the market ranges from 0.2 to 3% of the amount of the service.

Sum insured

The rate paid may not be more than the actual value of the property at the time of the title insurance transaction, but may be lower. The banking institution that issues the mortgage may require you to complete this process.

As part of minimizing its own risks, the bank offers to insure the amount of outstanding loans, which is usually less than the full cost of housing. In the event that this figure is lower than the value of real estate, then incomplete protection arises.

This means that when an insured event occurs, the payment will be made not in the amount of the total rate, but in proportions. For example, in the event that an apartment costs one hundred rubles, and is insured for eighty, then only 80% will be paid.

Thus, the bank will be directly satisfied, but the policyholder will be left without an apartment, as well as without funds. This is why it is advisable to enter into a loss protection agreement for the full value of the property being purchased. Then, immediately after meeting the requirements of the financial institution, the remainder of the rate will be paid to the participant in the defense process.

Conclusion of a contract and documents

It is required to submit the following documents for title insurance and, accordingly, copies of some of them:

• Title documentation in the form of a certificate of registration of property rights.
• Real estate purchase and sale agreement.
• A paper that confirms the value of the insurance item.
• Technical certificate.
• House book or providing an extract from it.
• A certificate that must be taken from the guardianship and guardianship authorities in the event that there are children under the age of fourteen.

It is important to take into account that the insurance company has the right to request any other documentation that is relevant to the case in order to assess the insurance risks.

How is the price of the property confirmed?

The cost of the insurance item is usually confirmed by the following documents:

• Conclusion from an independent appraiser.
• Cadastral passport, which must indicate its value.
• Purchase and sale agreement, payment documents or a notarized receipt.
• Documents confirming construction costs.

Often, in order to reduce taxation, sales and purchase agreements indicate not the real price of the object, but a significantly reduced one. In the event that a similar contract is provided as part of the confirmation of the cost of the housing being purchased, the insured amount will be the same understated.

Validity

The standard insurance period for a title is generally between one and ten years. This is due to the statute of limitations within the framework of which transactions may be invalidated.

Banks generally require the term of title insurance to match the period for which the loan is granted. When determining the limitation period, it is very important to take into account the moment when it starts calculating.

As part of real estate insurance, it is important to take into account the various provisions of the law, according to which the deadlines for appealing the ownership of the purchased apartment are determined.

Payouts and insured event

What is title insurance when that very incident has already occurred?

As a rule, the following papers serve as documents confirming such an incident:

• The statement of claim provided by the plaintiff with a note on the date of its receipt by the judicial authorities.
• Determination of his admission to the process of judicial proceedings.
• The decision of the court, which entered into force.
• Documents from other competent authorities on the reasons, nature, and, in addition, the amount of damage.

All documents must be provided to the insurer along with the main participant's claim for damage. This must be done within the time period established by the insurance rules.

The time for notifying the insurance company about the occurrence of an incident is three days. Violation of this period may serve as a reason for refusal to pay insurance claims.

In addition, the policyholder is obliged to give the representative a power of attorney to appeal, and, in addition, to protest the court decision. The insurer has the right to request absolutely any documentation related to this case.

The decision on the provision of payment can be made by a specialist in a pre-trial procedure if there is supporting documentation and subject to the fulfillment of obligations under the agreement.

In the event that at the time of the event the person did not pay or was overdue in the payment of the next installment under the agreement, then this monetary part is withheld from the total amount. All cases in which the insurance company has the right to refuse compensation are detailed in the rules for this service.

It is important to be careful when concluding a contract and not hesitate to ask a specialist any questions. After the expiration of the limitation period, after the completed transaction for the purchase and sale of real estate, unexpected applicants for housing may appear.

Property insurance in the event of its loss as a result of the termination of ownership (title insurance) is one of the most controversial types of insurance. On various forums, you can find diametrically opposite opinions. Someone thinks that this type of insurance guarantees financial protection when buying real estate. Others, on the contrary, argue that Russian insurers prepare documentation in such a way that no possible case will be covered. What is title insurance and what to look for when reading its rules?

Title insurance risks

There is no definition of title insurance in the legislation. In a general sense, this term means the risk of loss by a bona fide acquirer of an insured property due to deprivation of ownership for reasons beyond the control of the policyholder, on the basis of a court decision that has entered into legal force, including:

Due to the invalidation of the transaction, as a result of which the policyholder acquired the right of ownership;

As a result of the reclamation of the insured real estate object from someone else's illegal possession (satisfaction of the vindication claim by the court), including due to the invalidation of any transactions that preceded the transaction as a result of which the policyholder acquired the right of ownership.

According to the provisions of the Civil Code, a transaction can be declared invalid on the grounds provided for by law, by virtue of its recognition as such by a court (voidable transaction) or regardless of such recognition (void transaction). Based on judicial practice related to the termination of ownership of real estate, the main risks include:

Violation of the rights of persons who are not parties to the transaction (minor children, previous owners, heirs);

Incorrect documentation on real estate objects (inconsistency of information specified in title and other documents for a real estate object);

Establishing the fact of fraud in the last or previous transactions;

Invalidation of one of the parties to the transaction;

Making a deal under the influence of deception, violence, threat, or as a result of a malicious agreement of the parties.

On the basis of article 167 of the Civil Code of the Russian Federation, in the event that the transaction is recognized as invalid, each of the parties is obliged to return to the other everything received, and if it is not possible to return it, reimburse its value. According to Article 181 of the Civil Code of the Russian Federation, the limitation period for claims for invalidating a transaction is three years. And in the case of a claim by a person who is not a party to the transaction, the maximum limitation period is up to ten years from the date of the transaction.

To consider the issue of accepting any object for insurance, the insurer's employees try to consider in detail the title history of the object and the real estate seller himself. But it is almost impossible to thoroughly check previously executed transactions. The title insurance contract is not public, therefore insurance companies may refuse to insure you if there is too high a risk for the object.

What to look for in title insurance

In theory, title insurance looks like a reliable tool that provides a real estate buyer with financial protection. But, unfortunately, in practice, in order to minimize their losses, many insurance companies draw up insurance rules in such a way that the most likely insured events are not covered by the contract. If you decide to insure the title of the purchased property, you must be very careful when choosing an insurer and carefully study the insurance documentation.

The first and most important thing that should be paid attention to is the presence in the insurance contract of the fact that the insured event has been recognized as an insured event that the court has satisfied the vindication claim. This can be called the main risk in title insurance. A vindication claim is a claim for reclaiming property from someone else's illegal possession. If several transactions were made with the property, as a result of which it passed from one owner to another, a situation is possible when the last owner of the property will be sued. This will happen if, during one of the transactions, the rights of the owners were violated. Even a bona fide acquirer can be vindicated. The legal owner can reclaim the disputed property in cases where the property is out of possession against his will. Often the insurers' rules state that this risk is covered only if it is expressly stated in the contract. And such companies, of course, do not include it in the contract by default.

It should also be noted that all insurance companies make a prerequisite for the good faith of the purchaser. In the legislation, a bona fide acquirer is considered to be one who acquired property for a fee from a person who did not have the right to alienate it, about which the acquirer did not know and could not have known. This condition is certainly true, but in some cases, the court may interpret good faith in a peculiar way. For example, the court's recognition of the acquirer as unfair was one of the reasons for the initial refusal of insurance payments in the notorious case of the Chalaev family, whose history.

Also, special attention should be paid to exclusions from insurance coverage. The main risk of loss of ownership in the acquisition of real estate, which is almost impossible to trace, is the invalidation of the transaction due to the violation of the property rights of third parties in previous real estate transactions. Insurers try to isolate themselves from this risk as much as possible and prescribe an exception in the insurance contract: an event is not recognized as insured if it arose before the conclusion of the insurance contract, and the consequences occurred during the period of the contract (retrospective coverage). To date, a judicial practice has formed, which recognizes this exception as null and void.

If the court makes a decision on the invalidity of the transaction, the court will oblige the person acting as the seller under your sales contract to return the funds received to you. The likelihood that the other party to the transaction voluntarily wants to return the money is extremely small. In the absence of material benefits, which can be seized in the order of enforcement proceedings for the further sale of property at auction, no more than fifty percent of official income can be withheld from the debtor-citizen. Thus, debt repayment can be delayed for a very long time. Therefore, it is worth avoiding in the insurance rules the conditions that the amount that, according to the court decision, other persons are obliged to return to the policyholder, is withheld from the amount of the insurance indemnity. . Bona fide insurance companies introduce a condition corresponding to the rule of the Civil Code of the Russian Federation on the transfer to the insurer who made the insurance payment, the right to claim against the person responsible for the losses. In this case, in case of full or partial compensation for the loss by the other party to the transaction, the policyholder is obliged to return the corresponding share of the insurance compensation to the insurer.

If you could find an insurer that offers you acceptable conditions and intend to conclude a title insurance contract, you should pay attention to the term. The maximum period during which a vindication claim can be brought is in some cases up to 10 years. It is better to conclude an insurance contract for this period with an annual payment of insurance premiums. Since the date of the insured event is the date of entry into force of the court decision, and the courts on disputed real estate can last more than one year, if at the time of the expiration of the one-year policy it is known about the filing of a claim, the insurer may simply refuse to renew you.

To date, title insurance has been developed almost exclusively within the framework of insurance for obtaining a mortgage loan. There are only a few insurance companies dealing with title insurance of non-taxable real estate. If, in the event of the insurer's refusal to pay for the mortgage apartment, a bank can come to the aid of the insured, in the case of "voluntary" title insurance, the insured will have to rely only on his own strength.

Refusal of insurance compensation can be not only the absence of the event in the list of insured risks, but also the failure of the insured to fulfill its obligations upon the occurrence of an insured event, provided for by the insurance rules. Or if the insurance company considers that the client provided false information when completing the contract. Since insured events for this type of insurance are not massive, and the product itself is associated with many legal subtleties, then, as practice shows, often the issue of obtaining insurance compensation is resolved only through the courts.

Today we will consider a rather interesting question - title insurance of real estate. What is it and what is it for?

First of all, this topic may be of interest to those people who plan to invest free funds in real estate. If in the near future you are planning to purchase an apartment, house or summer cottage property, title insurance can save you from many troubles.

The fact of the matter is that when you buy a home that has repeatedly changed ownership, you put yourself in a dangerous position. Your right to the purchased property can be challenged at any time by one of the previous owners. There may be many reasons for this. Title insurance is designed to protect you from such risks. Let's take a closer look.

What is title insurance

So, what is meant by the term "title insurance of real estate"? What it is? This is the name of an insurance product that provides protection against the risk of losing the right to property if the transaction is challenged and invalidated. It is interesting that such a policy protects a person not from what may happen in the future, but from the possible consequences of what has already happened. At the time of drawing up the title insurance contract, such events are not known to any of the parties and do not manifest themselves in any way.

The name of the described policy comes from the phrase "legal title", which means a document confirming the exclusive ownership of a particular property.

Today, such contracts are most often concluded simultaneously with a real estate insurance contract. Such property is quite often the object of long legal chains. One and the same apartment can be sold several times, become an object of donation, alienation in any way, inheritance and transfer from hand to hand, based on the decision of the judicial authorities. If at any of the listed stages there were legal inaccuracies, then not only this particular transaction, but all subsequent ones can be challenged and invalidated. As a result of such actions, the current owner of the home is deprived of the rights to the acquired property. Title insurance, the reviews of which are the most positive, just protects the owner from such a risk.

Why is it needed

The main result that a person receives from this type of service is compensation for losses incurred in the event of loss of ownership of the purchased apartment, house or summer cottage. In addition, the contract may provide for other compensations related to compensation for additional losses associated with the insured event.

In this case, an insured event is recognized as a documented fact that you have suffered real damage associated with the loss (in whole or in part) of the right of ownership of housing. In this case, the events arose regardless of your will and on the basis of a court decision that has already entered into force.

What title insurance protects against

Acquisition of any property, especially housing, requires a balanced and responsible approach. It is important to take into account every little thing, all possible troubles. According to official statistics, just over one percent of transactions concluded in the real estate sector are recognized by the court as invalid. It seems to be a little, but this is if the case did not concern you personally.

The reasons for the dispute may vary. For example, the privatization did not take into account the interests of the child. This is already a reason to challenge the transaction. Moreover, this can be done even after two or three years.

Since housing is most often subject to fraudulent schemes, title insurance when buying an apartment will guarantee that your hard-earned money will not go into the pockets of "black" realtors.

Of course, before concluding a deal, it is worth carefully checking all the ins and outs of the property being purchased. But doing this can be very problematic. The fact is that archives most often refuse to provide data on all transactions previously made with property. They motivate their refusal by the fact that there is allegedly enough data about the last owner. In practice, this is far from the case. A much earlier owner may appear, and then the rights of all subsequent owners, no matter how many, will be invalidated by the court. This is why title insurance makes the buying and selling process much safer.

When a deal can be challenged and invalidated

There are several situations in which the conclusion of a transaction may be invalidated:

• during registration, fake documents were provided;
• the acquired object was seized due to the presence of outstanding debts of one of the previous owners;
• the apartment was not purchased from the true owner;
• the seller kept silent about the disagreement of his “other half” to the transaction;
• the heirs of one of the former owners apply for the purchased housing.

In some other cases, apartment title insurance can also protect the new owner from losses as a result of loss or limitation of ownership:

1. At the time of the transaction, the seller was a minor, suffered from a mental disorder or was legally restricted.
2. The documents were drawn up in violation of the current legislation.
3. The rights of the trustee have lost their validity, in cases where the transaction was not made by the seller personally.
4. The deal was made fraudulently or under the influence of violence or threats.

How much is it

So you've decided to take out title insurance. How much does such a policy cost, and what does its cost depend on? The sum insured is accepted on the basis of an agreement between the parties. Most often, it corresponds to one of the following parameters:

• market (actual) cost of housing at the time of signing the contract;
• the cost of acquiring such housing (replacement cost);
• replacement cost, that is, the amount required to build the same object;
• the amount specified in the loan agreement (if any);
• the cost of housing under the contract in accordance with which the ownership was obtained.

What affects the size of the insurance rate

The payment that you will have to make as insurance also depends on several parameters:

• the amount of the insured amount;
• the number of risks taken into account in the contract;
• history of the house or apartment (number of previous owners);
• the presence of a franchise and its size;
• the specifics of the regulatory framework that existed at the time of the conclusion of previous transactions or privatization;
• the validity period of the policy.

Depending on all these factors, the rate for title insurance can be calculated in the amount of 0.1 to 5% of the amount insured. It all depends on the terms of the contract.

Registration rules

This type of insurance is relevant not only if Title insurance of real estate will protect you also when buying a home in a new building. For the correct execution of the contract, you need to prepare:

1. A document confirming the ownership of the object (purchase, donation, inheritance, etc.).
2. State registration certificate.
3. Registration certificate of housing.
4. Extract from the house book.
5. House or land plan (if we are talking about insurance of these objects).

What to do in the event of an insured event

If there is a situation where title insurance is still useful, you should immediately notify your IC. You need to personally arrive there and provide the following documents as soon as possible:

• civil passport or other document confirming your identity;
• a valid title insurance contract;
• the original and a copy of the court decision establishing the fact of alienation of the acquired property.

After a thorough examination of the documents, the IC is obliged to pay you the full amount under the contract. In addition, if a clause was included in the insurance to compensate for other costs, for example, legal costs, this money will also be reimbursed to you.

Features of insurance

Unfortunately, the title insurance contract is not very popular in our country. Moreover, many people are not even aware of the existence of such a possibility. Therefore, when concluding an insurance contract, mistakes are often made, the presence of which leads to serious consequences when an insured event occurs.

When signing a contract, you should pay attention to the following points:

1. You should not sign a contract that contains an exhaustive list of insurance risks. It is highly likely that some situation will simply not be taken into account, which will subsequently lead to a refusal to pay. It is best if the contract states that the loss of ownership is subject to compensation, regardless of the reason.
2. Some ICs offer a policy that states that the refund is due only for transactions made with your direct participation. It can also negatively affect the receipt of payment.
3. Quite often, when concluding a real estate transaction, a much smaller amount is prescribed in the contract than it actually is. This is done in order to minimize the tax amount as much as possible. Therefore, in case of title insurance, it is very important to enter into the contract exactly the real amount of the transaction, and not the one that is spelled out in the sales contract.

Subtleties of title insurance with a mortgage

Quite often, along with the registration of a mortgage, banks oblige the client to arrange for health. This is not surprising, because the bank is interested in getting its money in any case. Nobody usually insists on title insurance, because it is not the bank that is interested in it, but you yourself. Indeed, even if the purchase is invalidated, the bank will have to return the money to you.

By the way, title insurance for a mortgage is very beneficial to the buyer himself. Indeed, before the conclusion of the contract, the insurance agent must carefully check all the nuances of the transaction and, in which case, provide the client with the assistance of a qualified lawyer. In general, do everything possible to avoid the occurrence of an insured event.

When insuring a title on a mortgage, you need to remember that you need to enter in the contract an amount no less than what you have to pay in the end. And the insurance contract itself should be concluded for the same period.

When won't insurance help?

Title insurance is not an absolute panacea. Unfortunately, there are risks in which it does not work. If, after buying a home, an encumbrance arises that is not related to the loss of property, the title policy will not help you. What does it mean?

Here's a quick example. You bought an apartment, and three years later it turned out that one more person was registered in it (without the right of ownership). At the time of the transaction, he was absent (for example, he was in prison or was working abroad), and now he has returned. If he has nowhere else to live, then in accordance with the fortieth article of the Constitution of the Russian Federation, he will have the right to live in your house. In this context, the situation will not be recognized as an insured event, since no one claims ownership at all.

So do not count on it as a panacea for all ills. In order to avoid unpleasant situations, you need to make the maximum amount of effort on your own to protect yourself from all risks.