All About Title Insurance

“Title” refers to your client’s legal ownership of a property, as registered in the government’s land registration system. Title insurance covers losses related to the property’s title or ownership, including:

• Title issues that prevent your client from having clear ownership of the property. • Existing liens against the title, for example if the previous owner had unpaid property taxes. • Issues related to encroachment on someone else’s property, for example, if a structure had to be removed because it is partially on your client’s neighbour’s property. • Errors in surveys and public records. • Any other title-related issues that could affect your client’s ability to sell, mortgage or lease their home in the future.

Basically, title insurance offers a wide range of coverage that can provide major benefits in case something goes wrong.

Title insurance can also come in handy if title registration in your client’s name can’t occur on the date their deal is supposed to close. The “gap” coverage in title insurance will allow your client’s lawyer to close the sale of the property even if registration is delayed.

Another key protection is title fraud, which occurs when a criminal uses stolen or forged documents to transfer your client's home’s title into their name, without your client’s knowledge. They can then obtain a mortgage on the home and disappear with the money. Although title fraud is relatively rare, it does happen, and title insurance may cover the legal costs of restoring the title to your client’s name.

However, it’s important to remember that title insurance is not a home warranty or home insurance. For example, theft, or damage due to fire, have nothing to do with the title, so they wouldn’t be covered.

Reference: Reco's Ask Joe Column