Title Insurance

"Title" is a legal term that describes and identifies a person's right to ownership of a property. Title insurance is an insurance policy that protects property owners and their lenders against potential losses related to the property’s previous ownership, such as unknown title defects, existing liens against the property, errors in surveys, encroachment issues, and title fraud, to name just a few examples.

If someone is in the process of purchasing a house, and the seller, or even previous sellers, don't have free and clear ownership, then they don't have rightful authority to transfer ownership to the purchaser.  Sometimes there is malicious intent on the part of the seller, but there can also be numerous situations where even the seller isn't aware of any issues until after the fact. Title insurance provides protection by covering losses (up to the policy's maximum coverage) incurred as the result of discovering any red flags, and may even cover the legal expenses required to restore the property's title to good standing.

The cost for title insurance can vary depending on location, type, and value of the transaction. Once a premium (or a one-time fee) is paid, the coverage will last as long as you own the property.

Here is a list of various title issues that would fall under title insurance protection:

Unknown title defects which pose a problem with the title and prevents clear ownership;

Existing liens as the result of the previous owner having unpaid debts associated with the property;

Encroachment issues, such as if a neighbour has built a structure on any part of the property; and,

Errors in surveys or if public documents have been drawn up incorrectly.

Title fraud is a bit different from the other examples as it usually involves an individual not associated with the property in any way using stolen personal information to transfer a home to their name without the owner’s knowledge. This fraudster could then apply to receive a mortgage or sell the property without the true title owner being aware and then disappearing with the money.

While few home owners ever need to draw on their title insurance policies, the benefits of securing title insurance far outweigh the costs of what could happen if something arises without it.