Here's a smart home buying tip - buy title insurance!
Whether you're about to buy a home or have owned one for years, and even if you don't have a mortgage registered against title, a title insurance policy can provide valuable peace of mind. What's more important than that?
When you buy a home, you're buying the title or deed or transfer of land to the property. Your lawyer will register it at the Land Titles Office with your name(s) as the owner(s) of the property.
To protect your investment and to permit you to sell your property or get financing (mortgage) down the road, you'll want good title. To protect your ownership, a title insurance policy provides coverage if your right of ownership is challenged, or a loss happens because of a title defect or a claim against your property. The premium will raise your closing costs a little, but when one considers the ramifications of not having such insurance, it's well worth the added paltry expense.
An example could be surprise restrictive covenants, zoning, location on conservation authority lands, a building encroachment onto adjoining property, defects which would be discovered by a local authority search, improvements built without a permit, a future forgery claiming an interest in the property, future construction of an encroachment onto the lands or matters which would be revealed by an up-to-date survey. Also, taxes, special assessments, utilities and condominium arrears may be covered in most policies.
Such policies, which provide an insured statement of title or ownership of real property for a specified, usually one-time premium, are relatively new in Canada, but have flourished for years in the USA. Its growth within the American market is due in part to ineffective land registration systems in various states, along with a dramatic rise in the secondary mortgage market, one involving the sale of title and equitable mortgages in the marketplace. Lenders and investors acquiring this mortgage paper require confirmation of various title matters concerning the property being mortgaged. Title insurance simply offers an expedient, relatively inexpensive method to satisfy this need.
The Canadian experience with such insurance has been unfolding over the past few years. The growth of secondary mortgage market activity,
certain limitations within the selected provincial land registry
systems and title opinions provided by lawyers have led to an increase of its
Title insurance can simplify real estate transactions
For example, a policy may eliminate the need for an up-to-date survey, thereby saving money for a buyer, and possibly avoiding closing delays. This type of insurance is often promoted as a method to avoid last minute title defect problems that could destroy a sale. Advocates cite the benefit of title insurance for a lender, who receives certain assurances.
Policy coverages dealing with both marketability and governmental or court orders include virtually all of the things which a lawyer would normally do in a residential transaction, and usually very cost effectively. The resulting savings from there being no need for a survey, searches or inquiries, make it a financially sensible proposition. And there's virtually no wait time. Thus, closings are greatly facilitated with such coverage.
When considering a policy, think about the following benefits:
Fast and Efficient Closing – On Time
You may not realize the value of this particular benefit until you're sitting outside your new home someday, ready to move in, with movers on hold (paid by the hour) while awaiting the call from your lawyer announcing the last minute title problem has been resolved and you're finally closed.
Protection against unmarketability, that is not being able to sell your property in the future or obtain financing against your home due to defects that would have been disclosed on an up-to-date survey, Real Property Report or Location Certificate. For a detailed explanation of survey terms, visit The Association of Ontario Land Surveyors.
Fraud and Forgery
Protection against fraudulently registered mortgages against the title of your property. Hey - it happens.
Duty to Defend
Pays the potentially substantial legal fees incurred during attempts to resolve insured title issues.
Includes coverage for renovations completed without a permit that result in a loss. This happens too.
Includes protection in the event a property fails to meet municipal zoning requirements.
Includes protection if someone claims an interest in your land, such as a driveway easement or builder’s lien.
Problem Solving/Facilitates Closings
Can include coverage for known defects such as encroachments, delays in registration and zoning violations.
Asking for a homeowner policy at the time of your real estate purchase may result in a lower premium. If your lawyer is ordering a policy for your lender, you can buy a homeowner policy cheaper at the same time.
This type of policy is different from any other insurance.
House insurance, sometimes referred to as homeowners insurance, covers the building and contents against fire and loss, as well as public liability. You pay a monthly or annual premium. A title policy, however, requires a premium to be paid upon closing - and only once. Plus there's no deductible. Title insurance is unique in that it protects your ownership or title against losses incurred as a result of undetected or unknown title defects ...
For as long as you own your home
Even if you're the rightful owner, there are instances such as real estate title fraud when the title can come into question.
Is title insurance worth it? You bet. For more information, visit First Canadian Title Insurance.
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