•   1. The Overview

    a. What is title insurance?

    Title insurance reduces risks for property investors and mortgage lenders. It indemnifies against losses arising from both known and unknown legal risks related to real estate acquisitions and mortgage finance by:

    • covering defects in land titles, including restitution issues, planning permission and building permits.
    • facilitating property sales and mortgage participations; and
    • insulating fiduciaries against exposure to litigation.

    At a time when institutional investors and banks are increasingly risk averse and subject to stricter regulations, title insurance is an important tool for investors and lenders to reduce risk.

    In addition, there is a growing demand from American and European investors, rating agencies, and auditors for additional disclosures, stronger guarantees and safety. Title insurance can address those needs quickly and efficiently when they relate to property ownership.

    Title insurance also frees investors and their lenders from having to understand and self-insure risks inherent in complex legal opinions in various languages, formats, contexts, and degrees of reliability.

    b. What is legal indemnity?

    A legal indemnity is a form of title insurance, typically used in the UK, which indemnifies the property buyer and the mortgage lender against a specific, defined risk, which has been identified by the buyer’s lawyer. Unlike the broader form of title insurance, legal indemnity policies do not cover unknown risks.

    c. What are the benefits?

    Title insurance:

    • Makes real estate transactions safer.
    • Facilitates and accelerates cross-border acquisitions and mortgage finance.
    • Allows Europe-wide legal due diligence, which eliminates the need to have the same documents translated and checked by buyer, lender or investor.
    • May cover cases of defective title, such as violations of restrictive covenants, by transferring defined risks from real estate buyer or mortgage lender to title insurer.
    • Makes real estate, as well securitisation markets, more liquid and efficient.

    d. What is covered by title insurance?

    Title insurance covers losses arising from:

    • Defects, liens, encumbrances on legal title
    • Fraud, forgery and error in title documents and registries
    • Right of access.
    • Zoning & permitting issues (with additional endorsement).
    • Invalidity or unenforceability of insured mortgages.
    • May cover identified risks, as in UK legal indemnities.

    e. What is not covered by title insurance?

    Title insurance does not cover post-closing events, such as future administrative decisions regarding zoning or permits. It also excludes pending litigation and consequential damages, e.g., business disruption or loss of future profits.

    It does not cover credit risk (e.g., a payment default by a mortgagor,or a lease default by a tenant or ground lessee), nor does it cover political risks.

    f. Why have US buyers and banks used this instrument for over 100 years?

    Title insurance was created to allow US banks to provide the same mortgage conditions nationwide, despite laws and regulations that vary from state to state, and even within states.

    This is similar to the situation for multi-jurisdiction transactions in Europe. Furthermore, loan policies of title insurance protect the mortgagee against defects in the borrower’s title to the property.

    g. Who is Secure Legal Title Limited?

    Secure Legal Title Ltd. was formed by four senior insurance industry professionals: Sean Dalton, Chairman, has created and run leading Lloyd’s syndicates and agents; Joel S. Peck, CEO, and Jean-Bernard Wurm, Managing Director, previously launched and managed two top US title insurance companies in Europe; and Geoffrey Lynch OBE, Underwriting Officer, has extensive experience as an underwriter at Lloyd’s.

    h. How is a Lloyd’s Syndicate policy issued?

    SSL Insurance Brokers Ltd are authorised to issue policies on behalf of various Lloyd’s syndicates under a ‘Binding Authority’. The insured receives a single Lloyd’s policy. The Policy Documentation from Secure Legal Title is delivered in an electronic format. A hard copy can also be issued if this is a particular requirement of the client or jurisdiction.