Title Insurance

What is Title Insurance?

A title insurance policy can protect homeowners and commercial property owners against various losses, such as title defects you didn’t know about at the time of purchase, encroachment issues, errors in surveys, fraud, and other title issues that could impact the policyholder’s ability to sell in the future. Policies also include the “duty to defend,” meaning the title insurer will cover legal expenses if the policyholder’s title interests are challenged.

Title insurance policies can also be purchased to protect the financial institution protecting a mortgage and the lender on title from title claims that would put their interest at risk.

What is Title Fraud?

Title fraud is when a criminal steals an individual’s identity and, through the use of forged or stolen documents, represents themselves as the true owner of their victim’s property. By impersonating the true owner, they then attempt to sell the property or even apply for a new mortgage against it.

Benefits of Title Insurance

Title insurance provides coverage against losses incurred by correcting title defects that would have been revealed by up-to-date survey, report on title, zoning memorandum, or compliance certificate. A title insurance policy also protects against encroachment issues, survey errors, fraud, and other title issues that could impact your ability to sell in the future.

Title insurance may:

Eliminate the need for costly off-title searches;
Eliminate the requirement for an up-to-date survey in most circumstances;
Ensure a quicker, simplified, and lower-cost closing;
Reduce risk;
Reduce the lawyer/notary’s time spent on file, which saves the client money;
Insure over some known defects;
Insure over the registration “gap” period, allowing transactions to close on time without confirmation of registration of the new ownership and mortgage;
Encourage the correction of title defects by clients, contributing to the preservation of the land title registry;
Provide additional legal protection for owners and lenders that is complementary to opinions given by legal advisors;

Types of Title Insurance

Homeowner policy (at time of purchase);
Existing residential homeowner policy (available for individuals that didn’t secure title insurance at the time of purchase);
Lender policy, protecting financial institutions in residential transactions;
Commercial property owner policy;
Lender policy, protecting financial institutions in a commercial transaction;

Differences between home insurance and title insurance

The difference between home insurance and title insurance is that home insurance protects the physical home and anything around or inside it. Title insurance protects the property’s title against various losses, such as title defects at the time of purchase, encroachment issues, errors in surveys, fraud, and other title issues that could impact a property owner’s ability to sell in the future.

Impact of the Canadian Title Insurance Industry

Since its introduction to the Canadian market in the late 1990’s, title insurance has become recognized as a best practice in real estate and mortgage refinancing transactions

With the recent increase in title fraud, more and more property owners are recognizing it as a necessary part of homeownership and purchasing title insurance to protect their new homes.

Although the use of title insurance varies by province, millions of property owners and lenders are benefitting from the protection of a title insurance policy in their real estate conveyance or mortgage refinancing transaction.