Election day is finally over for our neighbours to the south and today the world awoke to Donald Trump as president of the United States of America. Yesterday at the polls, American voters were faced with a significant decision, one that will undoubtedly shape the future of North America. As with all of life’s important decisions, a vote for either candidate came with its own benefits and risks which had to be carefully weighed by the voters. Fortunately with some decisions, there are ways to manage possible risks. When making the significant decision to buy a house, you can reduce some of the possible risks by getting title insurance.
Even though title insurance has been popular in Ontario for the past fifteen years or so, it remains somewhat of a mystery to existing and prospective homeowners. When buying a property, be it a home or cottage, people generally recall signing a whole lot of legal documents, their lawyer getting something called title insurance, and being handed the keys on the day of closing. Few, however, recall the specifics of the title insurance they purchased and the vital role it can play should an issue with title arise.
Let’s have a look at some of the basics in an effort to clear up some of the mystery.
What exactly is ‘title’?
If you have ‘title’ to a property, you have legal ownership of that particular property. It is the legal proof that you are the owner of a particular piece of real property (as opposed to personal property such as a car or bank account). Your title describes what rights you have to the property as well as any limitations, for example, subject to an easement that Hydro has the right to lay power lines across a section of the property.
You get title to a property when the legal owner of the property signs the ‘deed’ (also called a ‘transfer’) over to you. This change in title is then registered in Ontario’s electronic land registration system.
The job of your real estate lawyer is to ensure that you get ‘good title’ to the property you are purchasing. Specifically, getting good title means that you really own the property, that it is properly described and registered in official documents, and that no one has a claim or lien against the property that you are not aware of. Without good title, you will likely have difficulty selling or dealing with your property in the future.
So, what is ‘title insurance’?
Basically, title insurance is an insurance policy that protects you (as the property owner) as well as whoever holds your mortgage, if there is a problem with your title and you incur any losses because of it.
Some of the problems that can arise with the title to a property include:
- title fraud (before or after the closing date, for example, someone trying to take your title through fraud or forgery),
- ownership disputes,
- title defects,
- encroachment issues, for example a structure that is partially constructed on the neighbouring property,
- undischarged liens,
- old mortgages,
- tax arrears, and
- setback deficiencies.
Although some of the above issues may not seem all that significant, any one of them may take a substantial amount of time and money to fix. Title insurance can also cover the legal services provided by your real estate lawyer so that if an error is made by the lawyer, you can seek compensation through title insurance.
If you need to obtain mortgage financing to buy a property, you will likely be required by your lender to buy title insurance to cover the original amount of the mortgage. Generally, the only alternative to title insurance is a current land survey. Although title insurance is not a substitute for a current survey, it does provide you with coverage for losses that arise if an up-to-date survey was not obtained.
Title insurance does not cover every issue with title that could possibly arise. For example, it will generally not provide protection against such issues as environmental contamination, native land claims, zoning bylaw violations as a result of actions by the new owner, and title defects that were known before closing.
If you already own your home or cottage, fear not as title insurance can be purchased for property that you already own. As it is more difficult to determine whether there were any pre-existing conditions, the rules are a little different.
Buying a home or cottage and wondering if you need title insurance? Considering title insurance for a property you already own?
Call 613.836.9915 or email email@example.com to schedule an appointment to meet with me at our office in the Kanata-Stittsville area of Ottawa. Let’s discuss your situation and whether title insurance can give you peace of mind instead of being haunted by title issues.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.