French transaction affected by ongoing litigation
The seller built an office building on land acquired via a land swap and the dissolution of previously existing co-ownerships of several plots.
After having signed the required private agreement ("sous seing privé"), one co-owner refused to sign the notary deed, which would transfer the titles of the swapped plots of land to the seller. The (ex) co-owner is now challenging the validity of the agreements resulting in the land swap and is seeking total restitution of his plot of land and/or monetary compensation.
The insurance policy, a made to measure "known risk policy", provides cover to the seller, who is and, also after the sale, remains a party to the ongoing litigation, and to the purchaser, as well as their successors, for any loss as a result of the final decree of the competent court in favour of the (ex) co-owner.
The cover provided by the known risk policy enabled the seller to sell the property without any delays and without having to put a large amount of money in escrow, by paying a one-time insurance premium.
Both seller and buyer were dispensed of lengthy and difficult discussions regarding potential price adjustments, additional corporate guarantees and escrow conditions, and could therefore concentrate on the deal's essentials.
The known risk policy enabled the buyer to acquire the property with peace of mind and safe in the knowledge that any potential loss as a result of the ongoing litigation would be covered by the policy.
This proved to be another occasion where title insurance provided speed and security in a real estate transaction.
FAF International and Title Protection Europe are cautiously drawing the conclusion that title insurance, and known risk policies in particular, are finding their place in the French (civil law) real estate process.
Elise Klein Wassink, Specialist Broker, Title Protection Europe
Click here to contact Elise Klein Wassink
Click here to view more case studies