What the heck is title insurance?

By Jayson Schwarz
November 27, 2018

Title insurance is supposed to provide comprehensive insurance coverage for the certain title-related risks associated with homebuying. Risks such as zoning issues, claims of mental incapacity, lack of an 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 as long as the purchaser or his/her 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 new purchaser will not accept a new title insurance policy to insure over the mistake, at no cost? The insurer will pay out in accordance with the policy, or will if possible, repair the defect. Title insurance protects from vendors that won’t re-adjust. In addition, lawyers’ insurance is time-of- incidence related, which means in simple English that if your lawyer is dead, retired or stops practice and you make a claim after that, the lawyer’s insurance does NOT protect you.

Just so everyone understands, almost all of Ontario is now on an electronic registry system. Title insurance has become the norm and virtually all transactions are completed computer to computer. Make sure the lawyer you select has taken the title insurance courses, has gone to the seminars on Terranet, 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.

We have all read and heard about mortgage and title fraud where bad guys put fake mortgages on property or sell houses they do not own. Title insurance indemnifies you against these occurrences.

To summarize, title insurance does three things better than lawyers’ insurance:

  1. Gives better coverage as to the quality of your ownership than a lawyer’s insurance;
  2. Lasts forever when lawyers don’t;
  3. Protects from mortgage and title fraud;

 

In conclusion, every lawyer has an obligation to make you aware of the different companies’ title insurance options, so choose wisely.

Perhaps the most difficult part of writing these articles relates not the actual writing, but thinking of a topic to address. Mail, deliver or fax letters to the magazine or to us, use the web site (schwarzlaw.ca), email (info@schwarzlaw.ca) and give us your questions, concerns, critiques and quandaries. I will try to deal with them in print or electronic form.

About Jayson Schwarz

Jayson Schwarz LL.M is a Toronto real estate lawyer and partner in the law firm Schwarz Law Partners LLP. Visit the website at schwarzlaw.ca or email your questions about real estate to info@schwarzlaw.ca

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