TITLE INSURANCE-VERY IMPORTANT DOCUMENT
Title Insurance is an insurance policy covering the condition of title or ownership of real property at the time the policy is issued and is used to provide ownership protection for a buyer against losses or damages suffered as a result of title problems. Title insurance is obtained prior to closing a purchase for the benefit of the buyer.
Although title insurance as been standard in American real estate transactions, it has gained popularity as part of the typical Ontario real estate purchase only in recent years.
Traditionally Ontario buyers have relied solely on their lawyer's legal opinion that they have ‘good and marketable title'. Unfortunately the fact is no lawyer can completely assure a buyer that there is absolutely no chance of an error in the government record, that there are no undisclosed claims, that what appears to be the signature of the prior owner or consenting spouse is a true signature, or that there has been no prior fraud or forgery on title. Title insurance can satisfy such ‘gaps' in a lawyer's opinion.
Title insurance does not replace the role of a lawyer. It simply provides an added level of protection for the buyer. Ontario lawyers still must search title and certify the status of title before a title insurance policy can be issued.
The typical residential title insurance involves a simple one-time premium and provides protection for the buyer against losses suffered from the following types of matters:
Defects that would have been revealed by an accurate, up-to-date survey.
Contraventions of municipal zoning by-laws.
Unmarketability of title.
Defects in the title.
Invalidity or unenforceability of the mortgage on title.
Easements (other than the usual easements for utilities etc.).
Contraventions of subdivisions, development and other agreements.
Priority of certain construction liens.
Priority of unregistered easements and rights-of-way.
Fraud or forgery.
Solicitor error, omission or fraud.
In addition to these types of coverage, the typical policy also provides the insured with:
Indemnity for actual loss or damage for the amount of the policy (being the price paid for the property and increasing with inflation and raising value over time to a coverage which can be double the price paid).
Payment of legal fees and costs to defend title.
A no-fault method to resolve title problems.