Title Insurance: What is it and do I really need it?
When purchasing a home, condo or cottage our clients often ask us whether they really need title insurance. To many clients it seems like an extra cost on top of the already very expensive process of purchasing a home. Our advice, always get it.
Although in Canada it is not mandatory some mortgage providers will require it. In addition, they may also request that you obtain a lender’s policy which protects the lender in the event that the security (the property) is deemed invalid.
Title insurance may seem unnecessary but it may save you from even worse costs down the road.
What is Title Insurance?
Title means that you have legal ownership of a property.
In most cases once “Title” is registered in the government’s land registration system you have title to the property. However, in some rare cases claims to title which are adverse to you are discovered. There may be a competing claim for title to your property from a utility company, a past owner, the municipality or even your new neighbours. Although your real estate lawyer is expected to search for these types of defects they are not always discoverable. Further, title insurance will protect you from fraudulent activities if, for example, a fraudster steals your identity and is able to place a mortgage on your house or even sell it without you knowing.
Title Insurance also speeds up closing by reducing the amount of municipal searches that need to be conducted.What does Title Insurance cover?
Title Insurance covers:
• Unknown title defects
• Encroachment issues
• Title fraud
• Errors in surveys, and;
• Liens on the property
Title insurance does not cover:
• Known title defects
• Environmental hazards
• Changes to zoning bylaws, and;
• Land claims by natives.
Keep in mind the coverage can vary between policies. We recommend to all of our clients to read the policy so that they are aware of any exclusions.
What is the cost of Title Insurance and how do I get it?
As mentioned in our previous blog “Purchasing a Home: The Real Costs” we estimated that title insurance costs approximately $350.00. However, the cost varies depending on the purchase price of the home. The higher the purchase price the higher the cost of title insurance.
This is a onetime fee that covers you for as long as you own title and in some cases covers your heirs. If you choose to obtain title insurance you can do so by contacting your real estate lawyer or the title insurance company.
Kutner Law LLP highly recommends you obtain title insurance when buying a property.
If you have questions contact us, at no charge.
This blog post is for informational purposes only and should not be construed as legal advice.