Title Insurance: Is it worth it?


The answer simply is YES!!!!! And way more. This is the single insurance that protects you for any errors or claims on your property that resulted before, during or after you bought it. That is correct, it covers you retro actively.

The word “title” refers to a person’s ownership interest in their property. By purchasing title insurance, homeowners are protecting their ownership to their property, and their lender’s priority in the mortgage against losses arising from various title and off-title risks.

Cost & time savings

The cost of title insurance often pays for itself when compared to the cost of an up-to-date survey/ RPR/ Building Location Certificate and standard off-title searches. Title insurance is available for a low one-time premium paid at closing when you purchase your property. Survey/ RPR/ Building Location Certificate coverage is generally acceptable to lenders in lieu of an up-to-date survey/ RPR/ Building Location Certificate. This saves borrowers the cost of obtaining a new survey/ RPR/ Building Location Certificate and allows for a transaction to close faster.

Whether it is a house, condominium or cottage, title insurance brings security and peace of mind to lenders and homeowners during and after the real estate process, quite possibly saving them thousands of dollars should a claim arise. Title insurance has no deductible so the premium is truly a one-time fee. Coverage is valid for the entire time the homeowner holds the title to the home.

Lawyers / Notaries are still an integral part of the transaction

When buying title insurance you still need to retain a lawyer. Lawyers provide valuable independent legal advice on a variety of legal issues and prepare and register your deed/ transfer and mortgage. They also look out for your interest in the property.  Your lawyer is the conduit between you, your lender, and your title insurer. In fact, title insurers rely on the legal opinion they receive from your lawyer order to issue a policy. He or she will work to obtain a title insurance policy on your behalf. It is estimated that mortgage fraud in Canada exceeds $1.5 billion a year.

Why do I need this Policy?

Even if you are the rightful owner of a home, there are instances such as real estate title or mortgage fraud, when your title can come into question. The losses from real estate title or mortgage fraud are catastrophic with homeowners paying thousands of dollars in legal fees to defend their title. Lenders also possibly risk losing the full amount of their mortgage.

By obtaining a title insurance policy, you are getting comprehensive coverage for losses due to many forms of title and mortgage fraud. It includes a duty to defend your title, including paying legal fees, and clearing your good name.

How does real estate fraud occur?

Real estate frauds take several forms. A common denominator is that the fraudsters are sophisticated, equipped with modern technology, and are armed with the appropriate documentation. Having the necessary knowledge of the real estate process enables them to commit these major crimes.

The Basics…

Legal ownership in property is evidenced by the title to the property placed in your name. You obtain title when the vendor of the property signs transfer documents (a deed). Once signed the ownership of the property to you goes to you. Once this occurs, the government land registration records will reflect you as the owner and anyone searching those records will also recognize you as the owner.

A Typical Example…

  1. A fraud artist obtains the title to a property via a fraudulent transfer document (a deed).
  2. The fraud artist goes to a bank and obtains the mortgage funds.
  3. The mortgage is then registered against the property.
  4. When the fraud artist does not make any mortgage payments, the lender will serve notice that it intends to sell the property, and the scheme is revealed to the legitimate owner when they receive the notice that the lender is trying to sell their property.

Policies can be issued all across Canada for:

  • residential dwellings of up to six units
  • vacant land
  • cottages
  • condominiums
  • cooperatives
  • leased land

For a one-time fee, some of the covered title risks for residential properties include:

  • someone else owns an interest in your title
  • existing liens against the title
  • violations of municipal zoning by-laws
  • encroachments onto an adjoining property (other than fences and boundary walls)
  • setback violations
  • realty tax arrears
  • outstanding municipal utility charges, provided such charges form a lien on title
  • existing work orders
  • lack of legal access to the property
  • unmarketability of the land due to adverse matters that would have been revealed by an up-to-date survey / RPR/ Building Location Certificate
  • fraud, forgery, and false impersonation to the extent they affect the validity of title

 

When is the policy effective?

Generally, the policy date is the date the homeowner first purchased the property. Coverage is also extended to heirs who receive your home in the event of your death.

I always highly recommend my clients get the appropriate insurance when buying a home. Low premiums, peace of mind, and financial protection are some of the benefits of insurance. Being a director on a major condo board, you will not believe how often I see owners pay tens of thousands out-of-pocket due to insurable loses. Get insured, and be safe.

For more information please contact me at 416 909 5044.

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About wojciechpianka

After a few years of studying English and History at the University of Toronto, I decided to transfer to Ryerson University and pursue a Bachelor of Commerce degree. While studying, I worked various jobs where I acquired many skills. Starting as a teller at Scotiabank, I moved on to being a manager of a restaurant, admin staff at a medical clinic, a sales agent for INGDirect and a manager at One King West Hotel. While all these jobs challenged me, I never felt my potential being utilized. Finally in 2008, I completed the Ontario Mortgage Agent Course and signed up with The Mortgage Alliance Company of Canada. This was a great decision, as it allowed me to use the skills I learned working to help people achieve their real estate and financial goals. My passion for real estate and numbers has lead me to becoming a mortgage agent. Growing up in New York City, I always had a fascination of historic buildings and skyscrapers. At 21, I bought my 1st property and have been investing in real estate ever since. I firmly believe thru steady, safe and conservative investing a one can obtain long term financial wealth. One day, I hope to develop the same buildings I help clients purchase.
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2 Responses to Title Insurance: Is it worth it?

  1. This is the right blog for anyone who wants to find out about this topic. You realize so much its almost hard to argue with you (not that I actually would want…HaHa). You definitely put a new spin on a topic thats been written about for years. Great stuff, just great!

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