Real estate title insurance, first introduced in 2001, has been used primarily as a means of financial risk management, including as a means of guaranteeing the principal of a loan in the event of a loss due to a defect in real estate title during the collateral loan process and as a means of protecting investors through real estate securitization.
On the other hand, real estate title insurance for general consumers is an unfamiliar system with low public awareness, so there is still a long way to go in terms of public relations to establish and activate the system.
Recently, as transactional accidents such as jeonse fraud have become a social problem and consumers' anxiety has increased, real estate title insurance for ownership is receiving new attention as an institutional safety device to prepare for transactional accident risks.
In light of the reality that the credibility of registration is not recognized, let's look at a recent case to see what significance title insurance has as a safety transaction device to prepare for the risk of real estate transaction accidents.
The court ordered me to return the land I bought with my own money ten years ago to the clan.
Residents of a housing complex in Gwangju, Gyeonggi Province are said to be in danger of being evicted from their homes after losing a legal dispute over land ownership. This is an incident that was reported on SBS News on April 19 and 20, 2024.
A construction company that purchased land from a clan of the Gyeongju Kim clan in 2013 obtained a building permit for 48 houses and a daycare center in 2014, completed sales, and completed the transfer of ownership registration in 2015.
In 2021, more than six years after residents moved in, the clan filed a lawsuit against the residents of the housing complex, claiming that the land transaction was invalid and requesting the cancellation of the transfer of ownership registration. Recently, the court ruled that the land purchase contract initially signed between the construction company and the clan in 2013 and the subsequent registrations were all invalid.
Unreliable copy of register
The credibility of registration refers to the legal effect of registration that legally protects those who trust and transact with the contents of the registration even if the contents of the registration do not match the actual rights relationship. In short, it is to protect those who trust and transact with the registration first.
The register of real estate is the only public ledger that can confirm the rights relationship of real estate in Korea. However, since Korea does not recognize the credibility of the register of real estate, there is no institutional method to receive relief even if a transaction accident occurs due to a register of real estate that does not match the actual rights relationship and causes property damage.
If the credibility of the registration is recognized and the national compensation system for victims is well-established, even in the accident cases introduced above, homeowners will be protected by the law as good-faith third parties who trusted the registration and made transactions, so they will not have to worry about being kicked out of their homes and becoming penniless.
In Korea, since the 1950s when the Civil Code was enacted and promulgated, there have been consistent calls to grant credibility to copies of registers of real estate, but this has not been done yet.
If you are thinking about safe real estate transactions, title insurance is essential.
Title insurance is a private institutional device designed in the United States to promote stability in real estate transactions. It is an insurance contract that compensates for economic losses suffered by the insured, such as the buyer (owner) or mortgagee, due to defects in real estate title.
Title insurance aims to “eliminate risk” and “prevent loss.” The insurance company thoroughly investigates the defects in the title revealed in public records such as the register of real estate through a title investigation of the target real estate, thereby eliminating the risk of loss in advance. In addition, if a transaction accident occurs due to a defect in the title that is not revealed through the title investigation, the insurance company will act as a proxy for the insured to defend the ownership of the real estate and compensate for the final confirmed loss of the insured.
Currently, there are nine insurance companies selling title insurance products in Korea: Hana Insurance, Samsung Fire & Marine Insurance, KB Insurance, Hyundai Marine & Fire Insurance, Hanwha Insurance, DB Insurance, Nonghyup Insurance, MG Insurance, and First American (FA) Title Insurance.
There are four types of real estate title insurance sold domestically: “mortgage”, “rental loan”, “ownership”, and “lease”. “Mortgage” and “rental loan” are so-called B2B products sold to financial institutions, while “ownership” and “lease” are B2C products targeting general consumers.
The two insurance companies that sell B2C products are Hana Insurance and First American Title Insurance, while all nine insurance companies handle B2B products. Hana Insurance’s “My Home Real Estate Title Insurance” provides a title insurance service that further enhances transaction safety by linking title insurance and electronic registration.
Real I.V. Co., Ltd. is a specialized company in rights investigation/rights insurance. It is in charge of rights investigation work for major domestic non-life insurance companies such as Hana Insurance and DB Insurance, and is a specialized agency for Hana Insurance's "My Home Real Estate Rights Insurance." Real I.V. Co., Ltd. 167 Songpa-daero, Songpa-gu, Seoul, A-dong 901-ho Munjeong-dong, Munjeong Station Terra Tower 02-3401-7272
