Buyers - Title Insurance
Title Insurance is an insurance policy covering the condition of title or ownership of a property at the time the policy is issued and is used to provide ownership protection against losses or damages suffered as a result of title problems.
Available in Ontario
Although Title Insurance has been standard in American real estate transactions, such insurance has only recently gained popularity as part of the typical Ontario residential real estate transaction.
Typical Non-Insured Transaction
Traditionally, Ontario buyers have relied solely on their lawyer's "legal opinion" that they have "good and marketable title" (to confirm a clean title).
Unfortunately, no lawyer can completely assure a buyer that there is absolutely no chance of an error in the government records, that there are no undisclosed claims, or that what appears to be the signature of the prior owner or consenting spouse is a true signature, there having been no prior fraud or forgery on title. Title Insurance can satisfy such "gaps" in a lawyer's opinion.
Typical Insured Transaction
Title Insurance does not replace the role of the lawyer. It simply provides an added level of protection for the buyer(s). Ontario lawyers still must certify title to the insurance company that provides the title insurance policy.
Typical Residential Policy Coverage
For a one-time premium, a Title Insurance policy protects the buyer(s), or lenders against losses suffered from matters set out below as well as other matters more specifically outlined in the policy:
- Defects that would have been revealed by an accurate up-to-date survey
- Survey errors or illegibility of survey
- Contravention of municipal zoning by-laws
- Unmarketability of title
- Defects in the title
- Invalidity or unenforceability of the mortgage on title
- Easements (other than usual easements for utilities, etc.)
- Contravention of subdivision, development and other agreements
- Priority of certain construction liens
- Priority of unregistered easements and rights of way
- Fraud or forgery
- Solicitor error, omission or fraud
Because buying a home is such an important investment, you want assurance that title is yours "100%" (except for any mortgage). You don't want to find out, after closing, that an old lien was never discharged, that the previous owners didn't pay their property taxes, their utilities, or that someone has a claim against your land.
For residential real estate transactions with a purchase price of less than $500,000.00, a policy can be purchased for $150-250 (depending on the type of residential property).
This cost is offset by the cost of searches which are no longer required in title insured transactions.
As municipalities continue to increase their fees for zoning, subdivision and tax searches, title insurance is becoming an increasingly competitive option.
When a seller or buyer wishes to close a transaction quickly, a policy of Title Insurance is often the best option. By eliminating many of the searches otherwise required, a policy of Title Insurance can facilitate closings on very short notice.