Home Buyer Title Insurance in Ontario
Title insurance is growing in popularity in Canada. But what
is it exactly? Should you get it? Do you need it? Whether title
insurance is right for you is something you should discuss with your
lawyer, as it depends on the circumstances of your transaction. This
article will provide you with some background information about
title insurance to help you make an informed decision.
Title to property
Title is the legal term for ownership of property. Buyers want "good
and marketable" title to a property - good title means title
appropriate for the buyer's purposes; marketable title means title
the buyer can convey to someone else. Prior to closing, public
records are "searched" to determine the previous ownership of the
property, as well as prior dealings related to it. The search might
reveal, for example, existing mortgages, liens for outstanding
taxes, utility charges, etc., registered against the property. At
closing the buyer expects property that is free of such claims, so
normally they must be cleared up before closing. For example, the
seller's mortgage will be discharged and outstanding monetary
expenses (such as taxes and utility charges) will be paid for (or
adjusted for) at closing.
Sometimes problems (or defects) regarding title are not discovered
before closing, or are not remedied before closing. Such defects can
make the property less marketable when the buyer subsequently sells
and, depending on the nature of the problem, can also cost money to
remedy. For example, the survey might have failed to show that a
dock and boathouse built on a river adjoining a vacation property
was built without permission. The buyer of the property could be
out-of-pocket if he is later forced to remove the dock and
boathouse. Or, the property might have been conveyed to a previous
owner fraudulently, in which case there is the risk that the real
owner may come forward at some point and demand their rights with
respect to the property.
Who is protected with title insurance?
Title insurance policies can be issued in favour of a purchaser (on
new/resale homes, condos and vacation properties), a lender, or both
the purchaser and lender. Lenders will sometimes require title
insurance as a condition of making the loan. Title insurance
protects purchasers and/or lenders against loss or damage sustained
if a claim that is covered under the terms of the policy is made.
Types of risks that are usually covered under a title insurance
policy include: survey irregularities; forced removal of existing
structures; claims due to fraud, forgery or duress; unregistered
easements and rights of-way; lack of pedestrian or vehicular access
to the property; work orders; zoning and set back non-compliance or
deficiencies; etc. For a risk to be covered, generally it has to
have existed as of the date of the policy. As with any type of
insurance policy, certain types of risks might not be covered, for
example, native land claims and environmental hazards are normally
excluded. Be sure to discuss with your lawyer what risks are covered
and what are excluded.
The insured purchaser is indemnified for actual loss of damage
sustained up to the amount of the policy, which is based on the
purchase price. As well, some policies have inflation coverage,
which means that if the fair market value of the property increases,
the policy amount will also increase (up to a set maximum).
How long is the Title insurance coverage and what are the costs?
In the case of title insurance covering the purchaser, title
insurance remains in effect as long as the insured purchaser has
title to the land. Some policies also protect those who received
title as a result of the purchaser's death, or certain family
members (e.g., a spouse or children) to whom the property may have
been transferred for a nominal consideration.
In the case of title insurance covering a lender, the policy remains
in effect as long as the mortgage remains on title. A lender covered
under a title insurance policy is insured in the event the lender
realizes on its security and suffers actual loss or damage with
respect to a risk covered under the policy. Lenders are usually
covered up to the principal amount of the mortgage.
The premium for title insurance is paid once (at the time of
purchase). Generally speaking, in Canada the purchaser of the
property pays for the title insurance, though there can be
situations where the seller pays for it. Some policies automatically
cover both the purchaser and lender; others will cover both for a
small additional fee.
A residential title insurance in Canada for a typical home of less
than $500,000 costs approx $200plus taxes. See some
title
insurance companies.
Protection and peace of mind-Title insurance can help ensure that a closing is not delayed due to
defects in title. And, if an issue relating to title arises with
respect to a risk covered under the policy, the title insurance
covers the legal fees and expenses associated with defending the
insured's title and pays in the event of loss.
Call Amit if you are thinking to buy /sell a resale home or a new
builder apartment in Mississauga Toronto
Area As your Realtor Amit can assist you with purchasing title
insurance in Ontario.
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