You’ve just purchased a home, and now you have a title to your property – congratulations!
Now you start hearing about getting title insurance. What is this thing? And what exactly does it do?
It’s not uncommon for buyers to find themselves in situations where they feel like they’re buying more than just a home. They might also be purchasing someone else’s headache. We’re going to help you avoid the confusion today. Today’s blog will help you understand title insurance in Ontario.
What is a “Title”?
Before we dive deeper into everything about title insurance, let’s first understand the word “Title”.
A title is a concept that refers to the legal ownership of a property and the rights that come with it. It means the registered owner of real property.
What is Title Insurance?
Title insurance protects owners of residential and commercial property, as well as their lenders, against losses related to the ownership or title of a property.
Why do I need Title Insurance?
A title search can uncover liens, easements (where another person or company has rights to use part of your property), encumbrances (a claim against the property), or other conditions that could affect your ability to use or sell the property in the future. That’s where title insurance comes in: It protects you from any defects in the title. These are issues that could affect your interest. For example, when the seller has a lien against them for not paying child support. Or when a tax lien is registered on the title because the homeowner fell behind in paying property taxes.
So how do you know if you need title insurance? The answer depends on several factors—the most important being whether there are any outstanding claims on your property. If there are no claims on your property, then title insurance isn’t necessary for you. However, if there are claims on your property, then having an attorney review them can help determine whether or not they affect your ability to own and use the land as intended.
One thing of note is this: a title insurance is not a requirement in Ontario.
Before you decide whether or not to buy title insurance, speak with your lawyer, title insurance company, or insurance agent/broker. These professionals can help you determine what type of protection title insurance can provide you and if other options exist. It is important to keep in mind that title insurance does not replace legal advice when purchasing property.
What Does Title Insurance Cover:
A title insurance policy in Ontario 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;
- 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; and
- Other title related issues can affect your ability to sell, mortgage, or lease your property in the future.
Title Insurance provides coverage for losses related to a property’s title, as long as the policyholder owns the property. It may also cover most legal expenses related to restoring the property’s title.
What Does Title Insurance Not Cover:
Title insurance is a great way to protect your investment, but it’s not all-inclusive. Here are some things you should know about what title insurance does and doesn’t cover.
- Known title defects (that were revealed to you before you purchased your property);
- Environmental hazards (e.g. soil contamination);
- Native land claims;
- The cost of any improvements made to the property after you buy it;
- Any damages that occur after you acquire the policy and before you file a claim;
- Other losses or damages due to nontitle related issues.
When you’re considering buying a home, you want to make sure that the title to the property is clear and free from any issues. And if it isn’t? You need to know about it before you sign on the dotted line.
That’s why having a title insurance policy is so important. The policy protects you if there are claims that could potentially come back to haunt you down the road—and it does so without costing a fortune.
We all know there are risks involved when buying a home—we just don’t always know what they are until it’s too late. That’s why having access to an expert who can help guide you through these risks is essential to protecting yourself and your investment in the long run.
At Integris Law, we provide trustworthy services and legal advice for all of your real estate transactions, including those involving title insurance policies.