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Title Insurance Can Mean No Survey and No Delays For Home Buyers
Title insurance, which has been used in the United States for more than 100 years, protects your "title", otherwise known as the right of ownership in real property. Since 1991 when it made its way to Canada, title insurance has saved homebuyers money and aggravation, helped close transactions on time, and resolved potentially deal-breaking title and survey problems.
Used by consumers, lawyers, lenders, mortgage brokers, and real estate brokers, title insurance is available for residential and commercial transactions alike. It protects against a variety of problems that can delay a transaction, prevent it from closing, or threaten the purchaser's rightful ownership. Among the problems it insures against are fraud and forgery as they relate to title, title defects, survey problems, human error and the inability to market the property at a later date.
A policy of title insurance can also reduce the costs a homebuyer incurs during the home closing process. It eliminates many of the searches a lawyer would normally do, reducing the disbursement costs that you incur. With all major financial institutions now accepting title insurance in lieu of an up-to-date survey, clients can save the time and cost of having a survey prepared. They also avoid the delay and cost they would incur to remedy any problems a survey would have revealed.
Title insurance companies assume the risk that a homeowner may be required to remedy a title problem at a later date. When covered title problems arise, it is the role of the insurance company to correct the problem or pay for any loss the policyholder incurs up to the policy amount. Additionally, all title insurance companies pay for legal costs incurred in defending title against the claims of others.
Title insurance also can be used to insure over known title or survey defects. Depending on the problem, title insurance companies will sometimes provide coverage for issues that would otherwise prevent a deal from closing problem free. For example, when the home buyer has the same name as someone with a court judgment against them and the bank refuses to release funds, even though the purchaser signs an affidavit confirming this person is not them, title insurance can be used to ensure the transaction closes. Or if it is discovered that the garage or pool of the house being purchased extends onto a neighbouring property, a policy of title insurance can cover the cost to remove the encroaching structure, should this become mandatory. In instances like these, title insurance saves purchasers the cost and inconvenience of having to repair problems, allows the transaction to close on time, and sometimes may even save the transaction.
On average, the cost for two title insurance policies - one for the homebuyer and one for the lender - is $250. This figure varies by province and according to the type of property involved.
Title insurance is available through lawyers right across Canada. In order to maximize cost savings, you should tell your lawyer that you would like a title insurance policy early in the purchase process.
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