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The holiday home we want to buy has defective title. What can we do?

Property Clinic: We’re concerned that part of the road near the house we want to buy isn’t under the control of the management company

Title indemnity insurance is a form of insurance which protects property owners and lenders against financial loss resulting from challenges or defects in the title to property. Photograph: iStock

Siobhan Durkan
Wed Sep 6 2023 - 05:58

We are in the process of buying a small holiday home in a holiday complex. It has come to light that the management company didn’t have a small part of half the road near the house signed over to them. The company is now dissolved. Can we get title indemnity insurance to deal with this defective title? What is the most cost-efficient and secure way of doing this?

It is possible in a situation such as this to obtain title indemnity insurance, and that is likely to be the most cost-efficient way of dealing with the defect. The alternative is to have the management company reinstated or a new management company set up and a court application or engagement with the developer, if it is trading, to transfer half the road to the management company.

Siobhán Durkan is a partner at P O’Connor & Son, solicitors, Swinford, Co Mayo.

Title indemnity insurance is a form of insurance which protects property owners and lenders against financial loss resulting from challenges or defects in the title to property. The insurance should be for the benefit of the purchaser and all successors in title (including their lenders).

Therefore, in the event of the transfer of ownership of the property, the benefit of the policy should automatically pass to the successors in title. The protection in monetary terms to be provided by the bond should also be considered with care to ensure it is adequate.

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In a purchase situation, you should request that the vendor procure such a bond at their cost. They will need to submit a questionnaire to the insurance broker setting out the details of the property and defect.

Siobhán Durkan is a partner at P O’Connor & Son, solicitors, Swinford, Co Mayo www.poconsol.ie

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