The Element of Title Binders in Real Estate Property Conveyancing
Conveyancing is one of the essential elements in real estate. You can examine its definition from two perspectives. First, conveyance refers to the transfer of the interest of ownership from the party selling the property to the buyer. Secondly, you can also refer to conveyancing as the actual document that shows the transfer of the ownership of a property from the seller to the buyer. Such documents include lease agreements, contracts and land title deeds. Usually, the conveyancing process comprises several elements that you might know about. Title binders are a good example. Here is a detailed discussion of title binders to help you learn everything you might want to learn.
Title Binders Explained
When you enter a buyer-seller agreement with anyone, some inherent risks lie in the process of transacting. You need to protect yourself from possible financial loss in the event that something unprecedented occurs and hinders the transfer of the property in its desired state. Title binders come in handy when you want to mitigate such risks. Typically, a title binder is a temporary insurance policy covering the property in question during the process of conveyancing. It protects the seller and the buyer who have an interest in ownership but are still in the phase of transition.
When Do Title Binders Come in Handy?
In most cases, title binders cover transactional risk when individual insurance policies of the seller and the buyer do not overlap or cover a specified period. For example, the seller's obligation to transfer the property in its exact state may cease the moment you make a bid for that property. On the other hand, your liability may only commence after you pay for the property. The grace period between making a bid and your actual payment may be short and risk-free, but the situation changes in case such a period extends over several days or months.
Forms of Protection
A title binder provides indemnity against several types of risks that can affect the conveyancing. Typically, you will enjoy protection against theft and other fraudulent dealings on the part of the seller. For example, if you want to buy a fully furnished warehouse, a title binder offers indemnity against theft of any equipment in the warehouse provided it is within the interest of your transaction. Secondly, you also enjoy protection when losses result from acts of God. These acts include natural calamities such as floods, earthquakes and landslides that can affect the property you are conveyancing.
For more information, contact a conveyancing service.