What is title insurance and what does it cover?
It is important, when purchasing a property in Ontario, that you obtain one with clear ownership, which is also known as “good title.”
Title insurance is a form of insurance policy to insure the homebuyer and mortgage lender (when involved), against the loss or damage sustained as a result of surveyed title risks and defects. Title insurance helps to ensure that the quality of the legal title that you are purchasing when purchasing the property is unproblematic. In other words, it transfers the risks connected with the property title from the homebuyer and mortgage lender to the title company.
Title insurance is a form of insurance that has recently become more commonly accepted by different mortgage lenders.
Title insurance can provide coverage in the event that the following circumstances arise:
- Work orders which arise from the failure of previous owners to obtain proper permits;
- Cover a purchaser for issues that an up-to-date survey might reveal;
- Access-related problems;
- Any mortgage or lien affecting the property;
- The unmarketable title to the property;
- Another entity having ownership over the property or any other interests, whether or not it appears on the registered title;
- Liens that result from court orders, property tax arrears, or public utility arrears;
- Any unregistered hydro easement;
- Any uncompleted, unsigned, or unregistered documents;
- The invalidity of your title due to fraud, forgery, duress, incapacity, or impersonation.
It is important to note that title insurance will not necessarily fix any issue that is discovered on title. However, it will often times protect the owner from financial loss for issues which may not be discoverable through regular investigations.
For more information on real estate law, contact Marilyn Krol (partner at Krol & Krol) at 905.707.3370.
