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A good and marketable title to land is one you can sell easily. Defects in title vary widely. Some relate to ownership, and some to rights which exist over the land. Some are serious, some unknowable, and some merely theoretical. In any event, the current system appears to be that rather than correct a title, the purchaser is asked to accept title insurance.
Each such case must be assessed on its own, but we urge clients to be take care before accepting such insurance. A clean title means that you purchase the house, live in it with no difficulties, and can sell it on the same basis. A third party may always have some imagined grievance, and commence proceedings, but a good title should give no indication that any such attack is to be expected.
These questions arise when you buy. Despite the defect, we may well say that you could inhabit the house perfectly happily, without any objection, for many years. The real test of whether we do our job correctly when you buy the house, is whether you have any difficulty when you come to sell. Conveyancing standards are being raised, and titles which might have been accepted even two years ago, are now being rejected as not marketable, or in need of repair.
The difficulty with title insurance is that some objection is anticipated (though the risk is often very low). You may be involved in substantial litigation. Even if you know that the insurance company will pay up if you lose, the house can be unsaleable for several years. We also all know of situations in which insurance companies, for what ever reason, reject liability. After a claim is made, insurance companies have been known to find how the insurance proposal was wrong all along, and to reject liability.
You buy the house to live in it. Knowing that you would be compensated to a certain degree if the house were lost is not necessarily an advantage. We are attached to our house by emotional strings, and not merely financial ones.
Last, when you come to sell the house, the existence of title insurance is not a selling point. Other things being equal, a buyer who has the choice between a property which has no need of title insurance, and one which has title insurance, is likely to choose the one without insurance.
There are situations when title insurance is an acceptable safe guard. There are many situations where title insurance is a limited remedy which is not a limited and inadequate remedy. We emphasise again that each particular case must be taken on its own merits.
It is also worth mentioning that Title Insurance should not be necessary in the UK. In 1925, the Land Registry was established. They didn't have mission statements in those days, but the nearest they came was the declaration that the Land Registry was there to make good defective titles. That was the reason it was created. The Land Registry seems entirely to have forgotten this, and is usually a pettifogging hindrance.
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