What is a Title?
A legal term that means you have legal ownership of property. You obtain title to property when the owner signs the transfer document to you. Title is then registered in the government’s land registration system.
What is Title Insurance?
An insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership.
Do I Need Title Insurance?
Before you bought your home, the property may have changed hands several times. Even with a new build, somewhere along the way there may have been an error such as an incorrect survey, a non-existent building permit or title-related issues that can affect your ability to sell, mortgage or lease your property in the future. Title insurance protects you from these types of issues.
What Does This Insurance Cover?
Title insurance insures homeowner against financial loss due to issues to your ownership, fraud and other defects relating to your property. The title insurance company has a duty to defend a homeowner’s title from a court action as a result of a covered risk and provides compensation for actual loss incurred..
What are the Different Types of Title Insurance?
There are two types of title insurance policies:
Owner’s Policy – This policy protects the property owner from various title-related losses that are listed in the insurance policy, for as long as the property is owned. Lender’s Policy – This policy protects the lender from losses in the event that the property’s mortgage is invalid or unenforceable. A lender’s policy usually provides coverage for the amount of the mortgage.
You can purchase title insurance for residential and commercial properties also.
Coverage
Title insurance can protect you against:
- A defect in your title
- Any error made by your lawyer relating to title risks
- Unpaid liens, utilities, taxes (condo fees)
- An encroachment on a neighbor's property.
- Time gap between closing deal & actual title transfer
These issues an affect your ability to sell, rent or mortgage your property.
How Long Does the Coverage Last?
Your title insurance policy will protect you as long as you own your property, and will cover losses up to the maximum coverage set out in the policy. It may also cover most legal expenses related to restoring your property’s title.
Title Fraud*
Fraud comes in many forms and whether it’s referred to as mortgage fraud, real estate fraud or title fraud; it is a growing problem in Canada and across North America.
The three main fraud types affecting the real estate industry in Canada are:
Title fraud — when the ownership or title of a property is fraudulently changed or documents are forged to allow a fraudster to illegally sell or refinance the property.
Mortgage fraud — a scheme used to obtain a mortgage from a lender under false pretenses, also known as application fraud.
Value fraud — where a lender is led to believe a property is worth more than it really is through concealment or intentional misrepresentation of the property’s attributes and value.
Unlike credit card fraud, title fraud puts the onus on you as a homeowner to prove that real estate title fraud has occurred. If you are a victim and don’t have a title insurance policy in place, it can take considerable time, money and effort to deal with having to restore your title and/or remove any fraudulently registered mortgages. Plus, until the title is restored, you will be unable to sell or mortgage your home, potentially derailing important financial plans.
How can it Be Purchased?
You can purchase residential title insurance through your lawyer or title insurance company, or you can contact an insurance agent/broker. You can get the best price if you buy it at the time of purchase.
In summary, it is an inexpensive way to protect your title against a wide range of potentially costly issues. It gives you protection and peace of mind. Although title insurance can’t prevent you from becoming a victim of fraud, it can protect you from many of its consequences and the resulting stress.
If you already have one – make sure to check with your lawyer as what all is covered in your policy.
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