Indian real estate takes a stride towards transparency and continues to attract global investments; the adoption of title insurance emerges as a pivotal step in safeguarding interests of stakeholders including homebuyers as well as institutional investors. Its usage is also witnessing gradual rise across key property markets in India. However, certain challenges including limited awareness and a fragmented regulatory landscape continue to hinder the widespread adoption.
What is Title Insurance?
Title insurance is a specialised form of indemnity insurance designed to protect real estate owners and lenders against financial losses stemming from defects in the title or ownership of a property. These defects could include undisclosed liens, encumbrances, errors in public records, or even fraudulent claims on the property's ownership.
How does it work?
When a property is purchased, a title insurance policy is typically obtained. The title insurance company conducts a thorough title search to identify any existing issues with the property's title. If the title is deemed clear, the insurance policy is issued, and the insurer provides coverage against any future claims or defects that may arise. If a covered issue emerges after the purchase, the insurance company will compensate the policyholder for their losses, including legal expenses incurred in defending the title.
Current Status in India
Title insurance in India is gradually gaining recognition but remains relatively underutilised compared to more mature markets.