Title insurance for insolvency practitioners
Sponsored column by First Title
The reassuring news that the UK is out of recession is swiftly tempered by warnings that 2010 will be an adjustment year with more insolvencies and redundancies. Official statistics from the Accountant in Bankruptcy in Scotland confirm a 37% increase in Q3 Creditors Voluntary Liquidations from 2008 to 2009. Property Week recently highlighted industry concern that 1,573 property and construction related businesses became insolvent in Q2 of 2009. As sales of distressed property assets increase, the impact of title defects on marketability will present significant obstacles to Insolvency Practitioners.
First Title has created a bespoke title insurance product for solicitors acting on behalf of insolvency practitioners, which acts as a deal catalyst in the following ways:
- It can be used to overcome lack of title representations and warranties and known title defects, thereby enhancing the saleability of assets and assisting in “price chip” negotiations. Importantly, it can provide a safeguard for purchasers who are concerned about the quality of warrandice provided on behalf of insolvent companies.
- The product can streamline the asset transfer process by avoiding corrective conveyancing and negligence claims and by providing comfort to the purchasers who are unwilling to “take a view” on the asset quality.
- A title insured due diligence approach can assist with reducing transaction costs both on behalf of the creditor by way of savings on title searches and on behalf of the proposed purchaser where the premium may qualify as an allowable cost of the Receivership or Administration.
First Title’s bespoke product was recently used by BDO Stoy Hayward LLP as Receivers for the Dawnay Day Group, to enable the transfer of 221 distressed UK commercial properties to F&C REIT Asset Management. An offer to insure, made within days of receipt of the instructions, was instrumental in reducing time expended on detailed due diligence and facilitated a quicker deal completion. The application of the product is not however, limited to large scale refinancing transactions. It can be used in any transaction involving a sale or refinancing of single or portfolio property assets at risk of being undermined as a result of title and transaction cost issues. As creditors increase pressure on Insolvency Practitioners to shift distressed properties quickly and cost effectively, a no obligation title insurance quotation at the onset of the transaction may prove to be an invaluable asset for securing completion of the deal.
For more information or to discuss your specific title insurance needs, contact the First Title Scottish Team on 0141 248 9090 or by email at email@example.com
Reema Mannah is a solicitor and Senior Underwriter with responsibility for management of First Title's Scottish, Northern Irish and Irish operations