What is Title Insurance
Title Insurance is an insured statement of the conditions of ownership of real estate at the time a policy is issued. For a low, one-time premium a title insurer will compensate you for loss or damage suffered as a result of defined title defects, survey problems or other such title matters.
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Title Insurance Covers
- The policy amount (purchase price plus inflation coverage).
- ALL legal costs you would have to pay to defend your title for as long as you or your heirs hold an interest in the property.
Title Insurance Protects You Against
- Fraud and Forgery:
- Fraudulently discharged mortgages;
- Forged documents; and
- False impersonations.
- Title Defects:
- Unmarketability of title;
- Errors or omissions on the public registry;
- Unregistered easements (utility, pipeline, etc.);
- Priority of other liens or encumbrances;
- Executions or court judgments; and
- Undisclosed or missing heirs.
- Survey Problems:
- Errors in existing surveys;
- Encroachment(s) on a neighbouring property;
- No legal access to the property (rights of way);
- Municipal zoning and by-law infractions; and
- Contravention of subdivision, development and other agreement.
Why Do You Need Title Insurance?
- Title insurance provides coverage where traditional methods do not. In theory, buyers and lenders have limited protection provided by the Torrens system of land registry (existing in most provinces) and a lawyer’s opinion letter.
- You may recover loss from a lawyer’s professional liability insurance funds and provincial land assurance funds; however, negligence must be proven (legal costs paid by you). Payouts by land title assurance funds are rare and many things like fraud, forgery, zoning and by-law infractions simply aren’t covered.
Title insurers cover many of the things your lawyer would have had to spend time and money searching, possibly reducing your lawyer fees. Most financial institutions accept title insurance in place of an up-to-date residential survey.
When problems surface on closing, title insurers assume the risk, eliminating delays and perhaps even saving the deal.
Examples Of Problems Covered By Title Insurance
- A title problem – someone with your same name has a court judgment against them. The bank refuses to release funds even though you sign an affidavit confirming this person is not you.
- A survey problem- It is discovered that the garbage or pool of the house you are buying extends onto a neighbouring property, municipal setback or utility right of way. At any time, you can be ordered to remove this encroaching structure.
When you shift the risk to a title insurer, the deal can close – on time – so you can move in as scheduled, avoiding any additional costs and inconvenience.
- Title insurance insures against past problems that could affect your ownership in the future.
- Title insurance covers both you and your lender under the same insurance policy – at no additional cost.