Title Insurance is a form of insurance that protects the title to your property against financial losses incurred as a result of unknown title issues, issues related to municipal permits, and other issues like fraud, encroachments and builders liens.
Title Insurance has been predominant in the United States for many years mainly as a result of some deficiencies with American land registration systems.
In Alberta, we have a much more reliable system for land ownership and transfer of titles to property. It is called the Torrens land title system. The Alberta government is in charge of all original land titles and all original documents registered against the titles. Government staff examines land transfers and documents registered against them and issues a Certificate of Title for the property. The Certificate of Title will accurately reflect the current facts about the title with some exceptions – it will show if there are any claims registered against the property such as liens, caveats, mortgages, restrictive covenants, encumbrances, utility rights of way and more.
Because of the reliability of the Torrens land title system and the requirement in standard real estate agreements for sellers to provide a Real Property Report (survey) showing municipal compliance to buyers, title insurance was not typically recommended to purchasers in the past.
However there is a real benefit to title insurance for home owners.
Title Insurance can provide coverage for unknown:
Survey Defects – defects that would have been shown on a Real Property Report (survey of the property);
Encroachments including boundary walls and fences;
Work Orders that existed prior to you owing the property;
Zoning Violations;
Forced removal or order to comply due to lack of building permits (including permits for work inside the home and grading issues);
Tax and Utility arrears that are the responsibility of the previous owner;
Builder’s Liens related to work completed prior to you owing the property;
Violations of restrictive covenants;
Title Fraud – someone impersonates you or steals your identity and sells or mortgages your property;
Condo fees or special assessments that were not properly disclosed
Title insurance is available for existing and newly constructed homes with very rare exceptions. It can replace the requirement for a Real Property Report and municipal compliance. New Home Builders may wish to offer Title Insurance for Buyers instead of a Real Property Report especially since new home buyers may add decks or fences to the property soon after closing.
I also strongly recommend that in addition to a Real Property Report with compliance, a home owner get title insurance coverage. If you are told that you don’t need title insurance because you have a real property report with compliance – you were misinformed. Title Insurance covers issues that are not shown on the Real Property Report such as losses related to municipal issues such as outstanding work orders, permits, tax arrears, builder’s liens, and fraud. My office recommends title insurance for every transaction and if you choose not to get it you will be asked to sign a waiver in that regard. I have had too many clients call me with issues post closing that had they had title insurance, they would have coverage for their loss.
Title Insurance also may provide coverage in the event a financial encumbrance is registered on title prior to closing.
For more information about title insurance visit First Canadian Title Insurance
This article is provided for general information purposes only and does not constitute legal, insurance, or other professional advice. You are advised to contact a lawyer regarding any specific legal issues or a title insurance company with respect to coverage which may be subject to exclusions and stipulations.
