|The Bahamas Investor Magazine
June 21, 2010
June 21, 2010
As they do in many other jurisdictions, homebuyers have ready access today to title insurance in The Bahamas.
It wasn’t always so. Until the late 1990s, buyers relied exclusively on their lawyer’s opinion, based on a thorough title search and backed up by his or her indemnity insurance.
However, a title opinion is never 100 per cent failsafe, according to lawyers. There may be unforseen challenges to any title, says Léon Potier, director at First Bahamas Title Insurance. Defects may include fraud or forgery of documents, unreleased mortgages, restrictions on use of the property, clerical errors, undisclosed heirs or undiscovered wills.
To guard against these possibilities, property buyers would either go offshore to buy title insurance or rely on their attorney to ensure a good and marketable title.
The Bahamas has an unregistered land system, explains Potier, so there is always “an inherent danger that documents may be overlooked or not properly recorded. Title insurance, just like any other insurance, protects an owner against such a possibility, [and] if litigation is called for, the title insurance company will conduct [it] on behalf of the owner.”
A lawyer may also have indemnity insurance up to a limited amount, which can be a problem if a claim on a defective title goes above what is covered. This can often result in a court action against the lawyer.
“Title insurance is often considered to be a good substitute for an attorney’s title opinion,” says Potier, adding that title insurance would not be subject to all the qualifications and exceptions that a title opinion often includes.
The one-time cost of title insurance is directly related to the property’s value. The policy protects against any hidden defects in the title that may have existed before the property was purchased, and it will pay the legal cost of defending against all specified claims. If the claim against the title turns out to be valid, the insurance will reimburse the policyholder for his or her actual loss up to the policy’s value.
Banks may require proof of title insurance before they issue mortgages. Potier says that title insurance is particularly appealing to foreign buyers: “There is a comfort in the fact that their acquisition is fully protected upon a simple one-payment premium … that provides protection as long as that person owns the property.”
Realtor John Christie of H G Christie Ltd notes that “more and more people” are taking out title insurance today and “it is here to stay.”
“I think title insurance is nice for the seller to have because it can make the closing of a sale go much quicker.”
However, Christie cautions that buyers should not rely totally on insurance and should still use the services of a lawyer.
Jason McCarroll of Seaview Properties agrees that title insurance is “a great idea” that has growing appeal to both buyers and sellers in The Bahamas.
George Damianos of Damianos Sotheby’s International Realty says title insurance is the first thing that some American buyers ask about.
Title insurance is growing in importance, and it “is definitely something for the future of this country to have,” says Damianos.
Firms offering title insurance in The Bahamas include the following:
First Bahamas Title Insurance
Tel 502-5230, e-mail email@example.com, or visit www.firstbahamastitle.com
Lennox Paton Title Insurance Ltd
Tel 326-5959, www.lennoxpaton.com/prac_real_estate.php
Tel 322-7366, www.computitle.com