Title insurance

Author : Dalia Boussouira, Lawyer, real estate broker

Buying a new property is an important step and is often one of the most important investments a household can make. However, the fact remains that certain complications can arise even several years after a purchase.

However, there is an insurance product that allows you to protect your investment against certain problems that may arise after a purchase: title insurance.

What is title insurance?

Title insurance is a damage insurance policy that protects homeowners and mortgage creditors against financial losses arising from certain problems related to ownership rights. These can be defects in relation to title or other irregularities prior to the subscription date.

Here are some examples of risks that can be covered by title insurance:

-       Bylaws not being respected;

-       Encroachment on a neighbouring lot;

-       Work that does not comply with zoning bylaws;

-       Erroneous survey plans;

-       Charges not written off;

-       Fraud and identity theft;

-       Illegal views;

-       Charges registered against the property between the time of the signing of the deeds and their publication in the land register;

-       Errors made in title searches and examinations;

-       Servitudes not disclosed during a transaction;

Should such problems arise, title insurance will cover the costs of remedying them, including bringing a non-compliant component up to standard.

Title insurance can also cover legal fees and other expenses incurred by the insured for defending their title in the event of a dispute or claim by a third party.

Cost of title insurance

Title insurance is generally taken out by the seller when closing a real estate transaction, or in a case of refinancing, and its premium is paid in a single lump sum through the notary. The amount of the premium is based on the purchase price of the property, and, in the case of a creditor, it is based on the amount of the mortgage.

There are no renewals or other fees to pay, and the insured generally has no deductible to pay in the event of a claim.

However, premiums for commercial transactions differ from premiums of residential transactions.

How long does the coverage last?

The policy takes effect upon the closing of a transaction and is valid as long as the insured is the owner or holds an insurable interest in the property. As far as the mortgage creditor is concerned, the policy remains in effect until the debt is paid in full.

Exclusions

Here is a list of risks that are generally not covered by title insurance:

-       Latent defects;

-       Defects not existing at the time of subscription;

-       Defects caused by the insured;

-       Constructional defects;

-       Problems related to wells and septic tanks;

Conclusion

Title insurance is an insurance product that can save you a lot of financial worry in the event of the unexpected. The amount of the premium is negligible in relation to the benefits and allows you to have peace of mind.

Do not hesitate to contact your notary or lawyer to fully understand the advantages a title insurance can offer for your specific situation.

It is important to note that certain details can vary from one insurance company to another. We recommend that you carefully read your insurance policy and contact your insurer to fully understand the specific inclusions, limitations, and conditions of your coverage.

 

This article contains general information and should not replace legal advice from a lawyer or a notary that would take into account your specific situation.