By: Jayson Schwarz LLM
Title insurance is provides comprehensive insurance coverage for the certain of the title-related risks associated with home buying. Risks such as zoning issues, claims of mental incapacity, lack of up to date survey and the legal services provided by your lawyer (ie. title certification). It insures against such defects in title, which may occur from conflicting ownership claims, liens, undischarged mortgages, consents and the like. It will cover compliance and access issues ie. work orders, permit violations, fences, boundaries, tenancies, rights of way certain easements etc. It is supposed to be in force so long as the purchaser or his heirs own the property. Title insurance will outlive the certification of your lawyer, whose insurance stops if he or she dies or stops practice.
OK, what if something is wrong and a prospective purchaser will not accept a new title insurance policy at no cost? Provided the insurer does not go broke (this has happened in recent memory) the insurer will pay out in accordance with the policy, or will if possible repair the defect.
One of the BIG advantages of title insurance is that it saves you money. First your disbursements (money paid to 3rd parties for stuff like building compliance letters, subdivision compliance letters, deed registration, etc.) are lower. We estimate $200-$300 in savings after the cost of the policy.
Title Insurance costs are reasonable and you only pay on Closing, never again and the policy lasts as long as you own the home.
Just so everyone understands, Title insurance is now the norm and almost all transactions are completed by computer to computer communication. Make sure the lawyer you select has taken the title insurance courses, has gone to the seminars on Teranet, the electronic registry system and can properly advise you. The Law Society passed a rule that every lawyer on a residential real estate deal must advise the client of title insurance, the different companies and how it works. Remember a lawyer survives by repeat business and referrals and a lawyer’s mandate from the Law Society is that the client’s best interests must come first.
In conclusion every lawyer has an obligation to make you aware of your title insurance options so you can choose which way you want to go. Think through your options carefully and choose wisely.