When purchasing a home in Ontario, your lawyer will likely recommend title insurance. While it represents an additional upfront cost, title insurance provides crucial protection for what is likely your largest investment. Understanding what title insurance covers and why it's important can help you make an informed decision about this valuable protection.
What is Title Insurance?
Title insurance protects property owners and lenders against financial loss from defects in title to real property. Unlike other types of insurance that protect against future events, title insurance protects against past events that might not have been discovered during the title search process.
There are two types of title insurance policies: Owner's Policy - protects the property owner and lasts for as long as you or your heirs own the property, and Lender's Policy - protects the mortgage lender's interest in the property.
In Ontario, title insurance is a one-time premium paid at closing. There are no recurring fees, and the coverage lasts as long as you own the property.
What Does Title Insurance Cover?
Title insurance provides protection against a wide range of title defects and issues, including: fraud and forgery (including title fraud where someone fraudulently registers a mortgage or transfers ownership), errors in public records, unknown liens or encumbrances, encroachments and boundary disputes, zoning and building permit violations, missing heirs or undisclosed previous owners, and unpaid property taxes or utility bills.
Title insurance also covers legal fees and costs associated with defending your title if a claim is made. This can save you tens of thousands of dollars in legal expenses if a title issue arises.
Title Fraud: A Growing Concern
Title fraud, also known as real estate fraud, is a growing problem in Ontario. It occurs when someone fraudulently transfers ownership of your property or registers a mortgage against it without your knowledge. Criminals target properties that appear to have no mortgage or where owners are perceived to be less vigilant.
Title insurance provides protection if you become a victim of title fraud. The insurance company will cover: legal fees to defend your ownership, costs to restore your title, and any financial losses you suffer as a result of the fraud.
While title insurance protects against fraud, prevention is still important. Monitor your property title through Ontario's MyLandRegistry service, be wary of unsolicited offers to buy your property, protect your personal information, and regularly check your credit report for unauthorized activity.
The Cost and Value of Title Insurance
Title insurance premiums in Ontario typically range from $200 to $400 for an average residential property, depending on the purchase price and property location. This one-time cost provides lifetime coverage for as long as you own the property.
Consider the value proposition: the premium is a fraction of the potential costs if a title issue arises. Without title insurance, you would be personally responsible for: legal fees (which can easily exceed $10,000), costs to clear title defects, financial losses from fraudulent mortgages or liens, and potential loss of your property.
For this relatively small investment, you gain peace of mind knowing that your property ownership is protected against a wide range of potential issues.
Conclusion
Title insurance is an essential protection for Ontario homeowners. While it represents an additional upfront cost, the comprehensive coverage it provides against title defects, fraud, and other issues makes it a wise investment. Most importantly, title insurance gives you peace of mind knowing that your property ownership is protected. If you're purchasing a property in Ontario, speak with an experienced real estate lawyer about obtaining title insurance. Contact Kanevsky Law Office today to discuss your real estate transaction and ensure you have all the protections you need.
