Title Insurance was developed in the United States in the mid 19th century. Because of the way in which property law developed as the United States land records were often deficient. Title insurance was developed to indemnify (insure) against financial loss due to defects in the title to real property or due to invalid or unenforceable mortgage liens.
In general, the title insurer carries out its own search of public records to assure that the purchaser of a property will have clear title. The title insurance carrier will describe the title in the insurance document. The title insurance carrier will defend the title as described in the title insurance document or pay the amount stated in the title insurance document.
Almost all title insurance in the world is written in the United States. How about title insurance in Panama?
Title insurance is new in Panama since January of 2006 but it works the same as in the USA. Agents of the title insurer, usually attorneys, search the pertinent public records to make sure that the property is question is, in fact, registered in the name of the seller and that there are no pending liens or encumbrances. The insurer also assures that property taxes have been paid, and utility bills are paid up to date.
Besides checking public records a competent title insurer will request, in writing, any and all pertinent documents from the seller as an extra precaution.
The additional issue in Panama is untitled, derecho procesario property (right of possession). In this case similar searches are carried out through the Agricultural Reform Department making sure that certification is correct.
