Despite everyones best efforts in a Real Estate transaction, issues can arise that may not have been evident during the Purchasing process. We highly recommend that every Buyer consider purchasing Title Insurance coverage through their Lawyer while completing their transaction.
“Title” refers to your legal ownership of a property, as registered in the government’s land registration system. Title Insurance covers losses related to the property’s title or ownership, including:
- Title issues that prevent you from having clear ownership of the property.
- Existing liens against the title, for example if the previous owner had unpaid property taxes.
- Issues related to encroachment on someone else’s property, for example, if a structure had to be removed because it is partially on your neighbour’s property.
- Errors in surveys and public records.
- Title fraud.
- Any other title-related issues that could affect your ability to sell, mortgage or lease your home in the future.
Title Insurance can also come in handy if title transfer to your name can’t occur on the date your deal is supposed to close. The “gap” coverage in Title Insurance will allow your lawyer to close the sale of the property even if registration is delayed.
Some title insurance also includes coverage in case your lawyer makes an error while handling the real estate transaction. Although title insurance is a one-time fee, the coverage lasts as long as you own the property.
But remember Title Insurance typically won’t cover:
- Title defects you were aware of before you purchased the property.
- Environmental hazards.
- Problems that would only be discovered by a new survey or inspection of your property.
- Matters not listed in public records, like unrecorded liens or encroachments against the property.
- Zoning bylaw violations from changes, renovations or additions that you created yourself.
It is important to know that all lawyers practicing real estate law in Ontario are required to carry professional liability insurance. Your lawyer’s professional liability insurance may provide coverage for title related issues that relate to the services your lawyer provides in the real estate transaction.
A lawyer will provide you legal advice in order to help you make an informed decision about title insurance and other aspects of the transaction. Since title insurance policies contain a lot of legal terminology, make sure you ask your lawyer or title insurance company questions about anything that you do not understand.
Title insurance companies and insurance agents/brokers should meet best practice standards that include:
- Providing information to clients on all available options.
- Supply full details for all matters related to the title insurance transaction.
- Ensure that the recommended product meets the client’s needs.
Keep in mind that you are the customer and can choose any one of the title insurance companies that you think would best meet your needs.
Learn more about Title Insurance at the Financial Services Council of Ontario or the Insurance Bureau of Canada websites.
Need more information, or want to discuss your Real Estate needs? Contact us anytime - we are here to help!