A defective property title means there’s a problem with the legal ownership or rights to a property. These defects can cause legal or financial issues for the owner, and sometimes they only come to light after a sale.
Common title defects include:
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Errors in legal documents (e.g., mistakes in the deed)
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Unknown liens or debts attached to the property
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Undisclosed heirs or ownership disputes
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Boundary disputes with neighbors
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Easements or restrictions not properly recorded
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Fraud or forgery in past transactions
Indemnity Insurance for a Defective Title
Indemnity insurance is a type of policy that protects the buyer (and/or mortgage lender) from financial loss if a defect in the title causes problems in the future.
It doesn’t “fix” the defect but covers the cost of claims, legal fees, or compensation if the defect leads to a dispute.
For example:
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If a previous owner built an extension without planning permission and the council later takes action, indemnity insurance could cover the legal costs and fines.
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If someone claims they have a legal right over part of your property (like a right of way), the insurance could cover settlement or court costs.
Key points about indemnity insurance:
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Usually bought during conveyancing before completion.
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Often a one-off payment that lasts indefinitely.
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Typically required by mortgage lenders if they spot a defect.
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Doesn’t cover future issues you create yourself — only pre-existing defects.
If you’d like, I can give you a simple flowchart showing when defective title indemnity insurance is needed during a property purchase.
Do you want me to make that?
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