What is Title Insurance?
When you purchase a home you are in effect buying the title to the property. Title refers to the ownership of your property and this title is registered at the Land Titles Office. Title insurance is an insurance policy that protects against potential loss of title or ownership of the property and various risks that can arise. Certain defects in the title, including charges, liens or encumbrances, violations of municipal zoning by-laws, encroachments on an adjoining property (other than fences and boundary walls), setback violations, damages sustained to property due to improvements done without permits, lack of legal access to the property, unmarketability of the land due to adverse matters that would have been revealed by a current survey or fraud, forgery and false impersonation to the extent they affect the validity of the title.
Generally, there are two types of policies – the owner’s policy, which is sold to the purchaser of the property and the lender’s policy. As incidents of real estate title fraud are increasing in Canada lenders require you to purchase a lender’s title insurance policy. A lender’s policy, paid for by you, protects only the lender. It may be prudent to have a separate owner’s policy as title fraud is also a serious threat to homeowners. Properties that are most often targeted are those that are mortgage free. The losses to the homeowner can be catastrophic with the homeowner incurring large legal fees to defend their title.
Title insurance brings security and peace of mind to homeowners and lenders. The cost is a one time fee with no deductible and is valid for the entire time you own the property.