Legislative Research On Title Insurance

Title insurance is an important system of the real property law in America. It arises from the financing and loan, which has formed one of the key systems protecting real estate transaction as soon as it generated. By far, title insurance has become a main form of real property warranty. It is a convention purchasing title insurance in bulk sale. On November 26th, 2001, ZhongLiang Group signed a contract of real estate brokerage, deed insurance and investigation of consumer's credit and real estate information with the First American Company, and set up the first title insurance company in China. Beijing will introduce title insurance as the 10th five-year plan. All of these indicate that title insurance has entered our market. But title insurance is a new conception for whether theory or practice. There is not any law concerning title insurance in our country, so it's impossible to develop it and expect it to play an important role in real estate transaction. The author made a systematic study, and made many legislative proposals by analyzing and using the American experience for reference.There are four parts in this paper. The first part is the legislative reference of title insurance. It clarified the generation, basic content and main character by introducing and analyzing American title insurance.Title insurance is that the insurer promises to indemnify the insured for any injury if the title to land is less than that described in policy. The marketable title is the precondition of real estate transaction that is there aren't any defects of right and encumbrances. So the purchasers would like to do the title examination before closing. Since the examination is very complex and it is hard to make legal proposals, title insurance emerges as the times require. There are two types of title insurance, Owner's title insurance and Lender's title insurance. The former protects the purchaser's interest and ensures the real estate without any claim of the third party. The latter protects the lender's priority. Title insurance is different from other insurance. The insurance object is not a thing but a right, and title insurance doesn't ensure future risk but past risk, and it is one-time premium payment, and the insurance company has option when it must pay for the insured etc. The second part is the legislative value of title insurance. First, it ensures the security of real estate transaction. Security is the necessity of transaction. Ownership is the precondition as well as the result of the transaction. Only the least risk can bring about the most transaction security. Secondly, title insurance increases the anticipation of transaction. The market subjects can deal actively only when they realize that transaction will be supported, and the right will be protected, and they can settle the potential problems by searching in advance. Thirdly, title insurance enhances the efficiency of the transaction. The title examination is quick, convenient, and cost is low. It will shorten the period by searching title in their "title plant". Finally, title insurance achieves the benign operation of real estate market. It plays an important role in financing and risk investment, which will improve the development of the market.The third part is the legislative feasibility of title insurance. The author thought that there had been the legal environment in China. First, legal act isn't the only reason for real right alteration. Recording isn't the essential of negative alteration of real right. The potential defects out of records should be remedied by title insurance. Secondly, substantive examination doesn't avoid all of the defects. Title insurance and substantive examination can supplement each other. The recording system is not perfect, and the law of real estate is very anfractuous, and the real estate system isn't consummate, which increase the uncertainty of real estate transaction. So establishing title insurance is very pressing in China. The fourth part is the legislative design of title insuranc...