What is title insurance?

Title insurance —

a contract whereby the insurer agrees to indemnify:

  1. The owner of a real estate property against the actual loss or damage incurred in the event of a defect affecting the title to the land.
  2. The mortgage lender against the actual loss or damage incurred in the event that title is defective and / or if its security is not enforceable against title to the land.

Summary of General Coverage

Existing Risks prior to the Date of Policy:

  • Fraud or impersonation (before or after the Date of Policy)
  • Defects or irregularities that would have been revealed by an up to date survey, certificate of location or real property report
  • Non-compliance with municipal by-laws (ex. zoning, setbacks)
  • Notice of violation of a zoning by-law
  • Encroachment
  • Lack of access rights
  • Undisclosed property tax arrears or erroneous statement of account
  • Construction liens or legal hypothec for work started before the Date of Policy
  • Errors in the public records
  • Incorrect legal description or cadastral designation
  • Undisclosed arrears for common expenses (re: condo / strata)
  • Failure of the condominium or strata to be validly created

SCOPE OF THE COVERAGE:

  • INFLATION: The residential owner policy provides protection for the increase in fair market value up to a maximum of 200%.
  • COMPLETE COVERAGE: The insured always benefits from the full coverage of the title insurance policy, even if the policy is underwritten for a specific problem. Unknown risks existing as of the Date of Policy will be covered.
  • TO EACH ITS OWN TITLE INSURANCE POLICY: The loan policy does not cover owner and the owner policy does not cover the mortgage lender.

COVERAGE FOR KNOWN DEFECTS:

Upon underwriting analysis, the owner / purchaser of a real estate property will benefit from coverage during their period of ownership against a claim for a known defect covered by the terms of the title insurance policy.  In the event of the resale of the property to a third party, the title insurer undertakes to title insure the following purchaser under the same conditions, provided premium is paid.

EXCLUSIONS FROM COVERAGE:

  • The government’s power to regulate and legislate.
  • The government or quasi-government’s power to expropriate.
  • Any default, charge, hypothec, priority or other right created, tolerated, agreed or assumed by the insured or that does not entail any real loss to the insured.
  • Risks known to the insured but which have not been disclosed to the Company.
  • Real estate taxes that are not due and payable as of the Date of Policy.
  • Mineral rights and mineral extractions rights.
  • Compliance with the legal provisions relating to the protection of the environment.

Title insurance does not protect against problems related to the property assessment, its market value, the physical condition of the building, environmental issues or the insured’s misrepresentations.

LIFE OF A TITLE INSURANCE POLICY:

  • The title insurance policy takes effect from the date of execution by all parties of the instruments creating the interest insured by the policy.
  • The policy remains in effect as long as the owner has a right in the insured property (for the homeowner) and as long as the debt secured by the mortgage has not been fully reimbursed (for the lender).
  • The title insurance policy is transferable to the insured’s heirs, spouse or children or to a trust of which the insured is the author.

TITLE INSURANCE PREMIUM:

Tile insurance policies are issued for a one-time premium. Premium is paid at the time the title insurance policy is issued and the policy will remain in force as long as the insured retains an interest in the property.