It appears as though there’s a million different types of insurance involved and navigating all the paperwork can be confusing and disorienting. Our How to Buy a Home associates are here to help you navigate this process – and in this page, we’ll be covering what title insurance is, and why it’s a good idea to have it.
First off, “title” refers to the rights to the ownership of the land. When you buy a home, title is transferred to you.
Title insurance protects you, the homeowner, against potential claims that the property you own is not yours. If any issues questioning the ownership of the property you own arise, and you have title insurance, these problems can be quickly resolved. Although this type of insurance might seem unnecessary, these types of policies can help cover against any mishaps previous owners of your home have taken regarding who owns the home (or, in the case of a new home, the management/construction company).
As everything else in life, mistakes happen, and sellers have made mistakes when it comes to passing down the title of a property to a new owner. If any issues with the ownership of your home come into play, title insurance will help protect you. Some of these potential issues the insurance covers include everything from conflicting wills about the ownership of the home, title forgeries, or even a mysterious individual who claims to have inherited your property! When it comes to your home, it is always better to be safe than sorry.
The policy may cover you from such risks as:
Someone may try to fraudulently claim ownership to your property
If the seller neglects to disclose this you are protected
Lenders like for you to be at the same job for at least 24 months.
There are exceptions to this one. Speak to your mortgage broker to find out if you can qualify for an exception.
The property may not meet certain zoning by-laws
Some lenders will require you to purchase title insurance and it will generally cost between $200 and $600. The policy will be active as long as you own the property.
While most of the time acquiring this type of insurance is a choice, in some cases, to get a mortgage, you are required to have this type of insurance. For example, Ontario and Alberta do not require title insurance, but other parts of Canada do.
With that said, it's important to check with your bank if this is a requirement for your mortgage because some lenders, even in Alberta and Ontario will require you to purchase a title insurance policy in order for them to give you a mortgage.
Your lawyer will let you know if a policy is required.
Personally, I always purchase Title Insurance. For the extra couple hundred dollars, it gives me peace of mind.