Title insurance may save your assets
November 21, 2002
Few people know about this safety net until it's too late
By Frank O'Brien
Inman News Features
A Canadian homeowner was recently informed by their neighbour's lawyer that his septic field encroached into the neighbour's property. The neighbor was demanding that the septic be moved or the purchase of the land the septic system encroached on.
Fortunately, the owner had purchased title insurance and the insurance covered the cost of moving the septic tank.
In another case, when a homeowner applied for a permit to construct a shed, the city informed him that a permit was not issued for a sunroom that had been added to the dwelling prior to the purchase. The city demanded an engineer/architect inspection report verifying the structural safety of the room.
This homeowner also had title insurance, whichcovered the cost of the report and any necessary repairs to meet the municipal standard.
The above examples indicate why - after being introduced into Canada from the U.S. about a decade ago - title insurance is starting to gain acceptance.
Title insurance is something that few people know anything about - until it is too late. Basically title insurance insures defects in title that might otherwise prevent a transaction from closing, or may arise after the property is purchased. It is now recognized and accepted by all major Canadian financial institution. Many real estate agents also recommend it.
Title insurance, primarily available from First Canadian Title, is available across Canada and it addresses regional needs.
In British Columbia, for example, title insurance reduces solicitors' and notaries' exposure to liability. It also allows them to avoid the violation of a survey's copyright when an existing survey is photocopied.
In Alberta, Saskatchewan and Manitoba title insurance insures the registration "gap" so that transactions can close on time without confirmation of registration of the new ownership and mortgage.
For the payment of a single premium, title insurance stays in force as long as the insured retains an interest in the property. Policies can be purchased at any time prior to the closing of a loan or purchase transaction. Title insurance is available for both residential and commercial properties. Homeowner title insurance coverage automatically extends to those to whom the property is bequeathed.
In situations where there is not an up-to-date survey, or where the survey does not show an alteration, title insurance can save a purchaser several hundred dollars on the cost of financing. As well, a new survey can often identify technical or minor problems that could potentially cause further delays to the closing. Title insurance, in addition to eliminating the survey cost, can also eliminate the time it takes to obtain a survey and the delays in resolving relatively minor issues.
Proponents say title insurance is an inexpensive way for homeowners and lenders to protect their right of ownership in real estate from matters such as fraud, forgery, title defects, survey problems, human error and even the inability to market the property at a later date due to title related problems.
The bottom line is that, instead of a $600 to $800 property survey, a homebuyer could purchase $200 worth of title insurance.
In Western Canada, the cost for a title insurance purchase transaction (single policy purchase) is $150. The cost of an additional policy for the lender is $50, according to First Canadian Title Insurance the largest title insurer operating in Canada. In Ontario, Quebec and the Atlantic Provinces, the cost is $250 for single policy coverage, and $99 for an additional policy. These premiums are a one-time premium and apply for mortgages up to $500,000. For loans above $500,000, there is a sliding-scale premium.
For more information, talk to your lender, your real estate agent or your lawyer.
Frank O'Brien can be reached at firstname.lastname@example.org.
Copyright: Inman News Service