What is Title Insurance and why is it important?
Firstly, title refers to ownership of real property, so when you purchase a property, title is conveyed to you. When you sell a property, you will be transferring title to the new owner(s).
Title insurance is a type of insurance that provides coverage to owners and lenders against losses that arise from title or ownership issues.
A one-time insurance premium may provide you with coverage against:
- Title defects; an issue the prevents you from having clear ownership of the property.
- Existing liens; for instance, the previous owner had unpaid property taxes or condo fees that have been registered against the unit.
- Encroachment issues; The backyard shed in the backyard of your new property slightly sits on your neighbours property; and they want it removed.
- Fraud; Somebody obtained access to the title of your property and may have taken out a mortgage under your name, without your awareness.
Other things to consider:
Title-related issues may prevent you from selling or mortgaging your property at a later date.
The title insurance coverage will be in force as long as you own the property and in some instances cover common legal expenses during a claim.
Keep in mind that like most insurance policies, there are scenarios where you won’t be provided coverage. For instance, if you knew about any title issues prior to you making the purchase, you’re out of luck. In addition, any environmental hazards including soil contamination will not be covered. Therefore, it’s important for you to review the inclusions and exclusions associated with a potential title insurance policy.
There are two types of title insurance policies, one that caters to property owners, and the other to mortgage lenders. Both policies are intended to cover you as the homeowner, and in addition, your mortgage lender.
As a property owner, your coverage exists pursuant to the policy, which is usually set at a maximum coverage amount. In the case of a lender policy, this will cover the lender from losses should the mortgage be invalid or unenforceable. A lenders title insurance policy usually provides coverage for the amount of the mortgage.
When you consider the fact that title insurance is usually only $250 for a single residential lenders policy, it is a no-brainer. Why would you ever want to expose yourself to potential title issues that could result in hundreds of thousands of dollars of potential losses, in addition, a world of stress.
For additional information, click here to visit the website to First Canadian Title, a title insurance provider in Canada.
DV Capital Corporation