Buying a home is a BIG investment. When it comes to protecting that investment, consider title insurance – a cost-effective protection that shields homebuyers from many of the major risks that can affect the ownership and/or the future marketability of a property.
Like all insurance policies, title insurance comes with terms and conditions so it’s important that homebuyers understand how it works, and what it does and does not cover.
The most typical situation in which homebuyers call on their title insurance policies involves unpaid utility or realty tax bills from the previous owner. The second most frequent category of claims relates to building code issues. For example, a couple hire a renovator who discovers an earlier renovation was not done to code, and the whole home needs to be rewired. If the owners have a title insurance policy in place, the insurer would then compensate the homeowners for the costs of bringing the electrical work up to code.
Title insurance also protects homeowners if the house is not located on the property accurately and encroaches onto neighbouring land, or if a pool has been built that is actually on a neighbour’s property. A title insurer could resolve this problem by buying the piece of land that the house (or pool) actually sits on from the neighbour, and taking care of all the related legal work.
Title insurance can also eliminate the need for an up-to-date survey while protecting against any title-related issues that would have been identified by that survey.
Condominium owners have also found title insurance protection useful. If the buyer finds out that their new unit is smaller than what was promised, or lacks the lakefront view. With the right title insurance in place, the buyer will be compensated for the difference in value between the unit he took possession of, and the unit he thought he had bought.
For many buyers, the fraud coverage provided by title insurance is one of its greatest benefits. Title insurance can protect homeowners if they are the victim of fraud, and may also pay the costs involved in defending their ownership in the property and restoring their title to the home if necessary.
As with any type of insurance policy, certain exclusions will apply. Title insurance provides protection against title-related problems; it is not home warranty insurance, and will not protect homebuyers if the roof leaks or the furnace dies. As with any insurance purchase, the homebuyer should consult the policy for full details of the actual terms and conditions, and seek advice from a real estate lawyer.
