In this article, we will discuss what title insurance is, what it is not, and what it can do to protect you as a homeowner.
What title insurance is and what it is not.
Purchasing title insurance
When you buy a home or other piece of real estate, the title of that property is transferred to you. A document called the Transfer or Deed is registered in your name under the Land Titles system. The reason for title insurance is to provide compensation or damages if there is a claim or loss on the title.
In real estate transactions, lawyers will routinely advise title insurance for the buyer as well as the mortgage lender to protect them against certain risks they may face from the transaction.
Policy owners of title insurance will be responsible to pay a premium, the amount of which will vary depending on the purchase price, type of property, the amount of the mortgage, and so forth.
Once title insurance has been ordered by the law firm, the protection for the policyholder remains in place for as long as their name is on the title. There are no monthly premiums and the policy does not need to be renewed. The coverage continues for as long as you own the property.
What are the risks covered by title insurance?
Title insurance protects property owners from a wide range of issues including:
Defects in the title which may put the property owner’s rights to the property in question.
Conflicting ownership interests.
Liens against the title (for example if the former owner had an outstanding mortgage or loan against the property).
Encroachment issues such as when the title holder needs to remove a structure because part of it encroaches on a neighbour’s property.
Errors in surveys and public records.
Title fraud.
In summary, when your real estate orders title insurance for you, that insurance provides you with no-fault, comprehensive protection against title risks that can occur with a real estate transaction.
What is title fraud?
An emerging issue that we see today in the real estate market is increasingly title fraud. The vulnerable, vacant homes and identity theft are becoming targeted and common victims of title fraud. Having protection from this title fraud shall it arise would be from title insurance. This can occur when a fraudster transfers the title of your home without you even knowing it. This may allow the fraudster to steal your personal information so that they can forge documents in your name including registering a mortgage on the title of your home in order to steal funds.
This can easily happen without the homeowner’s knowledge, and they may not find out until they receive a call from a collection agency informing them of the massive debt against their home that is now a mark against them on their credit report. Or upon returning to your home and realizing that the possession of the home has been granted to someone else without you ever even selling your home.
Fortunately, if the homeowner has title insurance, they may seek out compensation from their insurer as they have been a victim of fraud.
Other risks that may be covered by title insurance.
Depending on the type of property and the insurance, title insurance may also cover other risks such as:
Arrears in taxes.
Arrears in utilities such as natural gas and hydro.
Executions against prior property owners.
Fire department work orders against the property.
Hydro work orders against the property.
Conservation authority compliance issues.
Access limitations.
Planning Act contraventions.
Fraud or impersonation of the insured’s interest in the title.
What is excluded from coverage?
If the title or property comes with risks that are difficult to quantify, these may be excluded from the title insurance. Some typical exclusions include the following:
Environmental matters such as infestations and soil contamination.
Indigenous land claims.
Post-closing expropriations.
Future use should the property owner change the use of the property.
Mortgage default.
Legality of rental agreements.
Septic system functionality.
Other risks that the insured knew about but did not share with the insurer.
Additionally, the insurer requires a multi-unit endorsement if the insurance is for a property which includes 2-6 units if they are to provide additional coverage.
Can Your Purchase Title Insurance Now?
If your home has already closed and you did not purchase title insurance at the time or do not have a mortgage on the property, it is still possible to obtain title insurance coverage. It is highly recommended that you do. Investing a few hundred dollars and being insured outweighs not having title insurance and later becoming the victim of fraud. It is important to be insured and protected. We can set you up for a title insurance policy today, give our office a call.
Contact Minhas Lawyers today.
If you are involved in a real estate transaction, it is highly recommended that you purchase title insurance as doing so can save you from enormous stress and financial costs should there ever be an issue with your title in the future. To schedule a consultation with one of our real estate lawyers, give our office a call today!
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