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The property you're acquiring is probably a resale property, having passed through multiple owners. Often, minor intricacies in title transfers go unnoticed, potentially leading to issues with the titles validity. Overlooked liens or forged signatures could arise at any stage, posing challenges for the purchaser. Even if the property purchase was legally sound and executed properly, any oversights could resurface to complicate matters for the buyer.
Title insurance helps insure the value of your title in case one of these errors jeopardizes your property. Unlike traditional property insurance, title insurance protects against mistakes in the past. A home owner’s title insurance policy is secured to protect the interests of the new owner.
Furthermore, Title Insurance protects you against title fraud. Title fraud typically involves a fraudster using stolen personal information, or forged documents to transfer your home’s title to him/herself (or an accomplice), without your knowledge. The fraudster then gets a mortgage on your home and disappears with the money.
Residential title insurance can provide the following protections or title insurance coverage:
• Comprehensive Coverage – It provides comprehensive insurance coverage against losses related to the property’s title. It may also provide coverage for your lawyer’s negligence or errors relating to title risks that are covered by your policy.
• Gap Coverage – It insures you for the “gap” between the time your property purchase is finalized (home closing) and the time your title is registered in Ontario’s land registration system.
• Survey Coverage – This coverage in title insurance may eliminate the need for a new up-to-date survey of your property, as well as protects you against errors in surveys and public records
• Legal Coverage – Title insurance covers most legal expenses involved in defending your home’s title, paid by the title insurance company. This could include things like title defects, and real estate title fraud
• Savings of Time and Money – It simplifies the closing process for your lawyer, thereby saving you time and money.
• Unknown title defects (title issues that prevent you from having clear ownership of the property);
• Existing liens against the title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property);
• Encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property);
• Title fraud;
For a $500,000 home, title insurance for a single premium typically amounts to around $350, with costs increasing depending on the property's price and type. The assurance of safeguarding your most significant asset likely justifies the expenditure. Alternatively, you can pursue a solicitor's opinion, but this option tends to incur significantly higher title insurance costs since the lawyer will need to conduct off-title searches, obtain tax certificates, building permits, and more.
In Canada, title insurance provides protection against various issues that could affect property ownership. It covers title defects, such as liens, encroachments, and zoning violations, as well as fraud and forgery related to the title. Additionally, it protects against errors in surveys or legal descriptions, undisclosed liens like unpaid taxes, and unknown easements or rights of way. This insurance safeguards both homeowners and lenders from potential financial losses arising from these types of problems.
In Ontario, a title insurance policy serves as an important protection for homeowners and lenders by covering a range of potential issues related to property ownership. It helps safeguard against title defects, such as existing liens, encroachments, or zoning violations, which could otherwise be costly to resolve. Additionally, it protects against fraud and forgery, a significant concern in Ontario's real estate market. Title insurance also covers errors in surveys, unknown easements, and rights of way, as well as unpaid property taxes or utility bills that may not have been disclosed. It is a one-time purchase made during the property transaction, offering long-term peace of mind to property owners and lenders by mitigating the risk of unexpected legal or financial claims against the property.
Surveys offer property owners precise information about the size and boundaries of their land, place markers at the property corners, and include a written description of improvements like buildings and fences. In Ontario, only a licensed Ontario Land Surveyor can provide this service. Property owners often need a survey when planning changes, such as adding a building or constructing a fence, or if they simply want to better understand the exact conditions and boundaries of their property.
Surveys are closely related to title insurance because they provide detailed information about a property's boundaries and any improvements, like buildings or fences, that may affect ownership rights. Title insurance, however, may offer coverage for issues that a survey could reveal, such as encroachments, boundary disputes, or unpermitted structures, even if no recent survey has been conducted.
If a property owner doesn't have an up-to-date survey, title insurance can protect against certain unknown or undisclosed problems that could arise later. While title insurance doesn't replace the need for a survey, it adds an extra layer of protection against potential legal or financial risks.
It is required that everyone on title signs. An example is the matrimonial home, if a husband and wife do not sign the title over to a buyer during a property transaction, the sale cannot be legally completed. In Ontario, and generally in other jurisdictions, both spouses must sign the transfer of title if the property is considered a matrimonial home, as both have equal rights to the property under family law. Without both signatures, the buyer would not obtain legal ownership, and the title to the property would remain in the sellers' names.
This could lead to legal complications, such as delays in the sale, potential lawsuits, or the deal falling through. Additionally, lenders may refuse to provide financing for the buyer until the title is properly transferred. It's essential that all legal owners of the property, especially spouses with marital rights, participate in the signing of the title for a sale to be valid.
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