FREQUENTLY ASKED QUESTIONS
Who can use Title Insurance?
- Investors, developers, corporate end-users
- Real estate funds and banks operating outside their borders
- Issuers of commercial or residential mortgage-backed securities (CMBS/RMBS)
- Property sellers
Lawyers provide an opinion. Title insurance provides a guarantee. A legal opinion, especially in a large commercial transaction, is fundamentally a disclosure document: Counsel carefully defines the state of title and related issues, identifies areas of uncertainty or defect, and carves out exceptions (e.g., fraud), thus putting the investor or lender in the position of having to “take a view” on such risks. Taking actions against the attorney or seller in a foreign country is not the most prudent course of action; it usually takes years and a large amount of money to settle title disputes. A title insurance/ guaranty policy reduces those risks and provides a guarantee.
Why do I need a title insurance if I work with an attorney or notario public (public notary)
Legal advice and participation from an attorney/ public notary is not only worthwhile but in some countries obligatory; since they have to draft the deed and proper documents required to transfer a property. They are also responsible for the title search in property transactions. But, should an error or negligent act occur leaving the buyer/ lender vulnerable, in many countries, neither notaries are held legal responsible for title defects nor their bond is large enough to cover the indemnification for damages and losses caused by them. But, if there is a claim with Fidelity Fidelity Title International’ underwriters, the purchaser or lender is covered up to the amount of the title policy.
Can Title Insurance also be useful to property sellers?
It is not unusual for a buyer to require guarantees from the seller regarding legal aspects (“reps and warranties”). In this case, it can be beneficial for the seller to provide insurance to the buyer, without having to carry contingent liabilities, or face risks after the deal closes.
How can Title Insurance facilitate distressed debt and equity transactions?
It is not uncommon that a bank or distressed borrower is unable to extend reliance on previous due diligence, or even provide solid representations and warranties, on account of insolvency risk. Title Insurance can provide a financial guaranty of title, which is critical to both the distressed seller and investor. Such a guaranty can speed the transaction, while reducing risk.
Under what law is the policy issued?
The Policy can be issued to foreign investors and lenders subject to U.S. laws.