Title Insurance- What Is It And Why Do I Need It?
Friday Feb 18th, 2022
The word “title” is a legal term that means you have legal ownership of property. You obtain title to a property when the owner signs the deed over to you and then it is registered in the land registry system.
Title insurance is an insurance policy that protects you, the home owner, against problems related to the title of your home. You will only make one premium payment when you first buy the insurance and the insurance policy protects you for as long as you own the property. The policy provides coverage against losses due to title defects, even if the defects existed before you purchased your home.
Some things that title insurance will cover you for:
1. Unknown title defects (title issues that prevent you from having clear ownership of the property);
2. Existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes etc secured against the property);
3. Encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property);
4. Title fraud;
5. Errors in surveys and public records;
6. Other title-related issues that can affect your ability to sell, mortgage, or lease your property in the future.
Title Insurance does not cover you against:
1. Known title defects that were revealed to you before you purchased your property
2. Environmental hazards like soil contamination
3. Problems that would only be discovered by a new survey or inspection of your property (e.g. the property is smaller than originally thought);
4. Matters that are not listed in public records (e.g. unrecorded liens and encroachments)
5. Zoning bylaw violations from changes, renovations or additions to your property or land that you were responsible for creating.
Some benefits of title insurance are:
Peace of mind- The policy covers the items outlined above so you can rest easy knowing if any of these problems come up affecting the title of your home that your title insurer will take steps to resolve the problem.
One time cost- The premium is usually paid for in the closing costs of your home. Some insurers permit you to purchase title insurance at any time.
When you close on your new home, your lawyer will discuss Title Insurance with you.