Purchasing Title Insurance
What is title insurance?
Title insurance is unlike any other kind of insurance. It is not house insurance which only protects the contents of your home or its structure and for which you have to pay a monthly or annual premium. Unlike house insurance, you only pay a one-time premium with no deductible.
Title insurance is distinctive in that it protects your ownership or title against losses incurred as a result of undetected or unknown title defects, for as long as you own your home. Even if you are the rightful owner of your home, there are instances such as real estate title fraud, when your title can come into question.
Why do I need title insurance?
Protect possibly your greatest investment – your home. Whether you are a new homeowner or if you have owned your home for years, title insurance keeps your home safely in your hands.
Title insurance protects you against losses as a result of title defects and claims against a property not uncovered in a title search. Title insurance provides protection against issues like unpaid liens, encroachment issues, construction liens, defects in title, costs arising from building code violations, as well as real estate title fraud.
If real estate title fraud occurs, the onus is on the homeowner to prove the crime and it can be very costly, financially and emotionally, to restore title. For a one-time premium, title insurance is one effective and inexpensive way to ensure your property is protected. It covers all legal expenses related to restoring a title and protects you for as long as you own your home.
What does “title” mean?
When you buy a home, you are buying the title to the property. It is sometimes also referred to as a deed. This means that you own the property and your lawyer registers you as the owner in the land registry system.
Having “good title” to your property is important because it protects your investment so that you will be able to sell your property in the future or obtain financing, such as a mortgage, against your home, if needed.
Top Benefits of Title Insurance
- Fast and efficient closing process — title insurance will help ensure your transaction closes on time
- Survey coverage – protects against unmarketability (not being able to sell your property in the future or obtain financing against your home) as a result of defects that would have been disclosed on an up‐to‐date survey, Real Property Report or Location Certificate
- Fraud and forgery — protection against fraudulently registered mortgages against your title
- Duty to defend — the legal fees associated with resolving insured title issues will be covered
- Building permit coverage — coverage for renovations completed without a permit that result in a loss
- Zoning coverage — protection should a property not meet municipal zoning requirements
- Competing interests — protection in the case of someone claiming an interest in your land; for example, an easement for a driveway or a builder’s lien
- Problem solving/facilitates closings — we can frequently provide coverage for known defects such as encroachments, delays in registration and zoning violations
What Does Title Insurance Not Cover?
When purchasing title insurance, it is important to read the policy and ask questions to be aware of the coverage that is provided. You also need to be aware of possible exclusions, which may include:
- Known title defects (that were revealed to you before you purchased your property);
- Environmental hazards (e.g. soil contamination);
- Native land claims;
- Problems that would only be discovered by a new survey or inspection of your property (e.g. the property is smaller than originally thought);
- Matters that are not listed in public records (e.g. unrecorded liens and encroachments); and
- Zoning bylaw violations from changes, renovations or additions to your property or land that you are responsible for creating. You need to carefully review your title insurance policy, as it may include additional exclusions and exceptions that are specific to your property.