When buying a property, we always recommend that our clients obtain a title insurance policy and are often met with a blank stare or a quizzical look. “What is it? Why do I need it.” These are questions we hear more often than not.
There are two types of title insurance policies – lender’s policies and owner’s policies. The lender’s policy is a title insurance policy your mortgage lender will require you to purchase on their behalf in order to protect their interest in your property. The owner’s policy is the policy you purchase for your own benefit which goes above and beyond your lender’s policy.
A title insurance policy will protect your title to the property for as long as you own it from any unforeseen events. When acting for our clients on the purchase of a property, we always conduct a full and thorough title search (hyperlink to my article about title searches). However, even the most exhaustive title search may fail to uncover underlying problems with the title to your new property.
One of the greatest protections offered by a title insurance policy is protections against real estate fraud, which has unfortunately been sharply on the rise in Ontario. Real estate fraudsters are becoming ever-more sophisticated and have been perpetrating schemes where they may acquire title to your property and either arrange a mortgage with a bank and take off with the money, or sell your home to an unsuspecting buyer taking the sale proceeds and leaving you to take care of the mess. In instances of real estate fraud, your title insurer will do all that is necessary to restore your title to your property and repay you for any losses your have suffered as a result of the fraud.
Sometimes, though, losses or problems with title can be much smaller than fraud. It may be that the previous owner of your property failed to pay certain utility bills which may cause a lien to be registered on title to your property after you’ve acquired it. Your title insurance policy will protect your from any such losses. In certain cases your title insurer will defend you in the event that a neighbour claims you are encroaching on their property or if your condo corporation claims that you have made an unauthorized alteration to your unit.
Another very important reason to obtain a title insurance policy is that if you are arranging a mortgage on your property, your lender will require you purchase a “lender’s” title insurance to protect their interests against any of the situations mentioned above and more. Put simply, unless you are self-financing your transaction, you will need to obtain title insurance in any event.
What’s nice about title insurance is that it is a one-time purchase that will protect you for as long as you own your property. Speaking personally, I have had to make a claim through my title insurer and it saved me more money than the policy cost me.
A good real estate lawyer should always discuss the benefits of title insurance with you when you are purchasing a new property. At Davidzon Law we have experience working with title insurers to arrange policies for residential properties and negotiating policies for more expensive commercial properties. As part of our commitment to our clients, we will always help you should you ever need to make a title insurance claim subsequent to purchasing your new property through us. If you are considering purchasing a property or have already committed to an agreement of purchase and sale, contact us at any time to discuss your options; we always strive to be your trusted real estate lawyers.
