Title Insurance - Why You Should Consider It
Title insurance is a product sold in Canada by a number of specialized insurance companies. The most well known reasons for a client to obtain title insurance are:
- You are buying property or getting a mortgage loan. Your bank requires either a current survey certificate/real property report or alternatively, title insurance. If there is no current survey certificate, then most clients opt for title insurance instead as it costs less.
- If mortgage money or property sale proceeds are being released before the transfer or mortgage have completed registration at land titles, title insurance will cover the risk of a surprise registration appearing on title that you couldn't see when documents were submitted to land titles.
It is only normal to not want to purchase insurance coverage when no one requires you to do it. However, before deciding to save the money when you are not being forced to buy title insurance, consider that there are some other benefits that may make it worth your while.
What Risks are Covered by Title Insurance
Some good reasons to consider buying insurance are below. Keep in mind that these are general statements only to keep my article somewhat easier to read. You would need to read the policy wording to be sure the coverage applies.
- There is no survey certificate (real property report) for your property. Your bank won't advance your mortgage without either a survey or title insurance. Title insurance is roughly 1/3 or 1/4 the cost of a new survey.
- Title insurance can sometimes let the lawyer release funds before land titles has completed its work (GAP coverage). Normally we need to wait to ensure that everything has registered correctly and that there are no other registrations on title before funds can be released. Land titles is only about 2-3 business days behind on their work so it is not very long, and there are reasons why we usually wait for registration first, but sometimes we cannot wait. That's when title insurance can help.
- If the seller or someone before them didn't get proper permits from the city or municipality to build or renovate, or if there is something where the property does not comply with municipal bylaws, as long as you had no knowledge or suspicion of this, title insurance 'might' pay for the costs to remedy the problem if the city or municipality is requiring it. To know which would or would not be covered, you would need to examine the policy more closely but some of these types of problems are insured. With only a survey certificate, you would have no protection for something like this.
- If someone makes a claim against your property afterwards, and it was never supposed to be your responsibility, then title insurance may help.
- You purchase a newly constructed house or building or you buy a property that was recently renovated. The seller doesn't pay their bills so contractors register builders' liens against your property after you take title. If it wasn't supposed to be your obligation to pay and you obtained the policy before taking title, then the title insurance company may step in and deal with the problem to clear up your title. Remember that even though you feel you have a reliable builder working for you, how do you truly know their financial status and ability to pay all of their suppliers and subcontractors.
- Identity Fraud: Someone pretends to be you. They fraudulently sign loan documents that are registered against your home. Maybe they sell your house and title is changed into someone else's name. The Saskatchewan land titles system has an "assurance fund" that will pay for most of this, but not necessarily all losses that you incur. Title insurance will pay for many expenses and losses from this fraud that the land titles system doesn't cover.
- Title insurance will not cover defects that you are already aware of.
These are only a few examples of how title insurance may help you.
Lawyers Don't Make Money Selling Title Insurance
I don't make any money from helping clients buy title insurance if I am helping you purchase or mortgage property. You only reimburse my office for the exact amount we pay to the title insurance company. Because of that, I have no incentive to tell you to buy it unless I think it might be to your benefit. Sometimes a mortgage lender requires you to obtain it. If no one is requiring you to obtain it, it is purely your choise. I only let you know it is available and let you decide.
Is a Survey ever better than Title Insurance?
If you want to build a new fence or if you are having a dispute with your neighbour about where your property line is, then title insurance isn't going to give you the answer. A visual survey certificate will most likely help you find the answer to the problem.
If you are planning to build or dig on your land, a survey will often show where easements run below your land ... such as gas line easements. Title insurance can't show you where they run. However, most utility providers and cable or communication companies have a line locate service which often is free. If you call them, within a couple of days, they will send someone to your property and plant flags where their lines are planted underground to help you avoid them. This may take longer in rural areas so you will need to make some phone calls to find out.
Remember that the survey is only accurate to the date it was made. If you have a survey from 10 years ago, structures may have been added that don't show up on the survey. Lines may have been planted underground after that date. Not all surveys show underground easements either. Don't assume it will be complete. Order a line locate from everyone that might have something planted underground. That is the safest procedure to follow.
Who Sells Title Insurance?
We buy the title insurance for you. There is no advantage for you to buy it yourself. It would only be a nuisance. In fact it would cost you more because we get a volume discount and give the full benefit to you.
Some examples of title insurance companies operating in Canada are First Canadian Title Insurance Company Ltd., Stewart Title Guaranty Company, Chicago Title Insurance Company Canada and TitlePlus. I typically deal with First Canadian Title (FCT) because we get a better rate for our clients through dealing with one company a lot and consistent dealing with them means I can understand their product better. However, I am sure the others offer good products as well and they are probably quite similar.
How Much and How Long Does it Last
Notice: The information on this website is general in
nature only. It relates to Saskatchewan, Canada and may not be
applicable in your jurisdiction. It does not constitute legal
advice to you and no solicitor client relationship will be established.
You should seek specific legal advice regarding your circumstances
from a lawyer entitled to practise law in your jurisdiction.
www.rickcarlson.com | Sat, 22 Sep 2018 11:36:56 CDT1
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