What is Title Insurance?
Title Insurance protects lenders and homeowners against a number of risks related to the property’s title or ownership.
Title Insurance is often used as a replacement for a survey certificate and has now become standard on real estate purchases or refinance transactions.
If you are buying or refinancing your home, expect your lender to require title insurance.
What does Title Insurance Cover?
From the point of view of most lenders, Title Insurance covers fraud, which can occur in a variety of ways.
With identity theft on the rise, it’s not difficult for a fraudster to obtain legitimate identification claiming to be the true owner. The fraudster can then deal with realtors and notaries as if they were the owner, and even sell the property.
Alternatively, the fraudster may work with a lender or mortgage broker, again with identification, to place a new mortgage on the property. In either situation, the true owner is unaware of the fraud and the fraudster absconds with the sale or mortgage funds.
Other typical examples include spousal impersonation and notary fraud.
In most cases, the Assurance Fund of the Land Title Office may reimburse the true owner, but this may take several months and cost thousands of dollars in legal fees. Title Insurance is usually quicker and less expensive.
In addition to protecting against title fraud, Title Insurance can cover:
- violations of municipal by-laws
- encroachments onto an adjoining property
- property tax arrears
- existing work orders
- lack of legal access to the property
- unpaid strata assessments
- zoning and setback non-compliance
- forced removal by a governmental authority of a structure built without a required building permit
- legal status of any septic system
- gap coverage
How much does Title Insurance Cost?
For properties with a purchase price under $1,000,000, Title Insurance generally adds $115 to $125 to the Lender Policy, and $50 to the Owner Policy. For every additional $1,000 over a purchase price of $1,000,000 the price increases by $0.90.
Unlike life or house insurance, Title Insurance is a one-time purchase with no annual premium.
How Do you Order Title Insurance?
The easiest way to order Title Insurance is to ask your notary to order it as part of buying or refinancing the property. There is no extra fee to order the policy.
Is Title Insurance Mandatory?
Only if required by the lender, which is the case on most files. Like many insurance policies, Title Insurance is optional. While it can bring peace of mind for those who are concerned with fraud issues, it may also be useful to those who are purchasing homes with a known encroachment or unauthorized improvements. Contact us to learn more about the benefits and costs of Title Insurance.
The information you obtain at this site is not, nor is it intended to be, legal advice. For individual advice regarding your situation, contact us. We would love to help you learn more about Title Insurance.