Title Insurance is an insurance policy that protects a residential or commercial property owner and their lenders against losses related to the property’s title.
For a one time fee, title insurance may provide protection from such losses as:
- Unknown title defects (title issues that prevent you from having clear ownership of the property);
- Existing liens against the property’s title (e.g. the previous owner has unpaid debts from utilities, mortgages, property taxes, or condominium charges 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;
- Errors in surveys and public records;
- Other title-related issues that can affect your ability to sell, mortgage, or lease your property in the future.
Your title insurance policy may protect you as long as you own your property, and may cover losses up to the maximum coverage set out in the policy. It may also cover some legal expenses related to restoring your property’s title.
It is important to read the policy and ask questions to be aware of the coverage that is provided. You also need to be aware of possible exclusions, which may include:
- Known title defects (that were revealed to you before you purchased the property – For example, you agreed to accept a defect in your purchase contract);
- Environments hazards (e.g. soil contamination);
- Native land claims;
- Problems that would be only be discovered by a new survey or inspection of your property (e.g. property is smaller than originally thought);
- Matters that are not listed in public records;
- Zoning bylaw violations from changes, renovations or additions to your property or land that you are responsible for creating.
Title insurance does not provide compensation for non-title related issues. It is not a home warranty or home insurance policy, and will not provide compensation for:
- Damages due to flooding, fire, or sewer backup;
- General wear and tear of your home (e.g. replacing old windows, a leaky rof, or an old furnace);
- Theft (e.g. a burglar breaks into your home and steals your television); and
- Other losses or damages due to non-title related issues.
You must carefully review your title insurance policy, as it may include additional exclusions and exceptions that are specific to your property.
There are two types of title insurance policies:
Owner’s policy – protects the property owner from various title-related losses that are listed in the insurance policy, for as long as the property is owned. On owner’s policy sets a maximum amount of coverage.
Lender’s policy – Protects the lender from losses in the event that the property’s mortgage is invalid or enforceable. A lender’s policy usually provides coverage for the amount of the property’s mortgage.
You can purchase title insurance for both residential and commercial properties. Types of residential title insurance include:
- Types of residential title insurance include:
- Policies for new homeowners;
- Policies for existing homeowners;
- Policies for lenders in a residential mortgage.
- Types of commercial title insurance include:
- Policies for individual purchasing commercial properties
- Policies for lenders in a commercial mortgage
Please contact a title insurance provider for further information regarding Title Insurance. Title insurance must be ordered through your lawyer. My office works with First Canadian Title Insurance. Watch their Title Insurance 101 video here