“Fifteen years after its introduction, title insurance continues to play a growing role in the CEE real estate market,” Jean-Bernard WURM, Co-Founder & Managing Director of Secure Legal Title, London said talking to Property Forum about the trends in the CEE region’s real estate sector.
Invented in the US more than a hundred years ago, title insurance indemnifies against losses arising from both known–and unknown–legal risks related to real estate acquisitions and mortgage finance, thus helping property investors and mortgage lenders to better manage investment risks.
“American investors in Europe were the first to require title coverage. CEE demand then came from Western European or Israeli investors in cross-border transactions but now, in most cases, we tend to insure domestic banks and investors,” WURM said adding that currently a strong demand for this kind of insurance products is coming from Western Europe, as “the complexity and volume of cross-border transactions have increased”.
He explained that while in the past policies used to be restricted to pure title on properties, in the past five years Reps & Warranties coverage has become common in CEE for corporate acquisitions, instead of asset deals. This is the case in Poland, Czech Republic, Slovakia, but not yet in Romania or Hungary. Title insurance coverage is now also being extended to renewable energy risks, covering the risk that building and operating permits for wind and solar farms and power plants are challenged by authorities, potentially affecting revenues and trigger a default on the loan.