Natasha Shaw

What is Title Insurance?

There are actually two types of title insurance associated with home buying - one policy is for the lender and one policy is for the homeowner.

Lender Policy
These days, most lenders are actually making a lender title insurance policy a requirement of the mortgage and so it’s often not an optional expense. This insurance is used to protect the lender against loss resulting from legal claims by others against your new home and they ensure that the mortgage is valid and enforceable against the property.

Homeowner Policy
In comparison, a homeowner’s policy is mostly optional, unless there is some concern over your purchase transaction closing on time. If there is some delay with registering the title in time for possession day, most lenders will accept a title insurance policy instead. Otherwise, a homeowner title insurance policy is insurance that the improvements upon the land comply with applicable zoning bylaws, and there are no encroachments upon the lands or adjoining lands.

If there does turn out to be an encroachment or zoning non-compliance and it needs to removed, your policy would cover the cost of the compliance or the removal of the encroachment.

What Will My Homeowner Policy Protect Me From?
A homeowner’s policy also protects the insured owner, for as long as they have an interest in the property, against a number of risks including the following:

·       Lack of marketability of the land

·       Lack of a right of access

·       Someone else has an interest in the title

·       A document is not properly signed, sealed or delivered

·       Forgery, fraud, duress, incompetence or impersonation

·       Future frauds and forgeries affecting title

·       Defective registration of a document

·       Restrictive covenants limiting the use of the land

·       Liens arising from mortgages, taxes, utilities, judgments or condominium charges

·       Builders’ Liens

·       Rights of possession arising from leases, options, family law or homestead rights

·       Easements over the Land

·       Enforced removal of existing structures because they encroach onto adjoining land or easements, or because they violate municipal by-laws

·       If the house cannot be used as a single family residence because it violates a restriction or zoning by-law

How Do I Get a Homeowner Policy?
If you do decide to purchase a homeowner title insurance policy, just like the lender policy, your lawyer will arrange it when processing the final legal paperwork and the cost is usually about $200 – $250. The most well-known companies offering title insurance for both lenders and homeowners are Chicago Title Insurance Company Canada and First Canadian Title.

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• Home Insurance

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