What is Title Insurance?

What is Title Insurance?

Title Insurance is an insurance policy worthy of being aware of whether you are a property owner or to-be property owner. 

Firstly, title simply refers to ownership of real property. When you purchase property, title is conveyed to you from the sellers. Similarly, when you sell property, title is transferred to the purchasers.Title insurance provides coverage to real estate owners mortgage lenders against loses that arise from title and ownership issues.  

A one-time title insurance premium usually provides coverage for the following:

  • Title defects: An issue that prevents you from having free and clear ownership of property.
  • Existing liens: For instance, the previous owner had unpaid property taxes or condo fees there are registered against your unit.
  • Encroachment issues: Your backyard shed slightly sits on your neighbours property and they want it removed.
  • Fraud: Someone has obtained access to the title of your property and have taken out mortgages using your name and without your awareness.

Points to consider: 

  • Title-related issues might prevent you from selling your property or mortgaging your property.
  • Title insurance coverage will be in force as long as you own your property and in some cases will cover legal expenses related to a claim. 
  • Keep in mind that title insurers are in the business of not paying out claims, that is how they remain profitable. In so many words, when you file a claim, it is not guaranteed that you will receive compensation. For instance, if you were aware of a title issue prior to purchasing and closing on your home, you’re out of luck. If you are a private mortgage lender who exercised little to zero due diligence on verifying your borrowers income and you find that you lent $500,000 to a strange, good luck to you. Therefore, it is important to thoroughly review and understand the inclusions and exclusions of your title insurance policy. 
 

As eluded to above, specialized title insurance products exist for both property owners and mortgage lenders. In most cases, a mortgage lenders title insurance policy will provide coverage to the lender for the amount of the mortgage. You being a property owner can expect maximum coverage as outlined in your title insurance policy. Considering the fact that a residential title insurance policy usually only costs $250, it seems like a logical decision. Especially considering the potential pitfalls and title issues that might result in hundreds of thousands of dollars without sufficient coverage. 

Both title insurance providers in Canada, click here to learn about First Canadian Title, and here, to learn about Stewart Title.

DV Capital Corporation
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Website: www.dvcapitalcorp.com  

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