KINGSTON, Jamaica – NEM Insurance Company has pioneered Title Insurance in Jamaica primarily to reduce the time and costs involved in property transactions, NEM’s Acting General Manager Chris Hind stated Tuesday (April 15). He was speaking at a breakfast launch event held at the Jamaica Pegasus Hotel in Kingston.
“The system of securing a mortgage loan on a registered title in Jamaica is slow, inefficient and to some degree disorganised,” he said. Frequent complaints concern the lack of deadlines, the costs involved and the lack of redress if problems subsequently arise with the title.
“We believe Title Insurance settles most, if not all of these problems,” Mr. Hind said. Title Insurance is a policy which protects against loss if any issue emerges regarding the property title as a claim against ownership.
NEM is providing an Owner’s Policy to protect owners or buyers interests. The company also provides a Lender’s Policy to cover the lender’s interest against problems with the title.
Along with NEM, other partners involved in presenting the new product include Caribbean Title Limited, First American Title Insurance Company and Jamaica National Building Society, the parent company for NEM.
Jamaica National is the first lender to have accepted the new Title Insurance offering for its clients. Caribbean Title is carrying out risk assessments on the insurance, while First American is fully underwriting the insurance policies provided by NEM.
“Recognition of the need to introduce a product such as title insurance into Jamaica comes from a shrewd assessment of the real estate market,” said Earl Jarrett, General Manager of Jamaica National.
Purchasing land is the first step for many who would bring other types of investments to the island, he said. “If the first step is dogged by delays, it has a negative impact to bringing other investments here.”
It takes less than a day to transfer a car, but a minimum of two months to register a property, Mr. Jarrett said.
Mr. Earl Jarrett (left), General Manager of NEM Insurance parent company, Jamaica National Building Society (JNBS), discusses the NEM First American Title Insurance collaboration with Mrs. Tuey Brady-Murdock, Vice-President / Councel of First America and Mr. Ronald Graham, Chairman of Caribbean Title Limited. NEM has introduced an Owners policy and a Lenders policy to the Jamaican market.
This is a particular problem for developers, said Ronald Graham, Chairman of Caribbean Title Limited. “Some have been pickled because they cannot bring their projects to a completion.”
By speeding up real estate transaction, all parties involved should benefit, Mr. Graham said. “It is a win, win, win for everybody.”
Title Insurance provides lenders with the security guarantees, which permit them to make speedier payments to developers when a project is complete, rather than when a title is prepared.
Properties which do not have a registered title are essentially locked out of the commercial lending market, Mr. Jarrett said. Investment in such properties creates ‘dead capital’, which cannot be used to improve the economic lives of its owners.
“In the mortgage lending business, very often we meet persons who want to upgrade their properties or take out a mortgage, but cannot do so because many do not have registered titles,” Mr. Jarrett said. The owners do not have the collateral to access the necessary funding.
Jamaica has two systems of property ownership. Apart from a system of registered property titles, there is also a common law title system. A registered title is an official title issued by government and guaranteed by it. Common law titles are private real estate contracts without the government guarantee.
“It is estimated that we have some 300,000 parcels of ‘dead capital’ in Jamaica,” Mr. Jarrett said. Title insurance offers the security to lenders to make such properties acceptable to commercial lenders.
This could unlock vast areas of untapped land resource by bringing it into the formal capital market, the Jamaica National executive said.
Additionally, Jamaica has one of the highest levels of land transfer costs in the world, Mr. Jarrett said. The 2008 World Bank Report on the Ease of Doing Business shows that it costs twice as much to transfer land in Jamaica as it does in other Caribbean and Latin American countries surveyed.
For someone purchasing a house for $6 million, the transfer cost is 13.5 per cent, which is an additional $500,000-$700,000 in fees, he said. Title Insurance offers a structured mechanism for property transfers, which would reduce the costs of additional transactions including surveyors and valuators reports.
Creating a streamlined land transfer process will also benefit lawyers, Mr. Graham said. By reducing the “headaches” in property transactions, it should increase their satisfaction level, as well as that of their clients.
