A recent headline in the Toronto Sun caught my eye: Homeowners urged to get title insurance after Etobicoke real estate fraud.1 The related article tells the tale of unknown individuals who allegedly impersonated the owners of a home and sold it while the owners were away. The story includes a recommendation from Tim Hudak, of the Ontario Real Estate Association, to get title insurance for your home.
In addition to being the place where you live and raise your family, the home is often your largest single asset. What do you do if you find out one day that the registered owner of it is someone whom you have never heard of or that there is now a whopping $500,000 mortgage on it to which you did not agree? How do you navigate trying to undo the fraud? Reporting the matter to the police can be important, but it will not reverse the fraud.
Having title insurance which insures your property against fraud may be the answer. We often get retained by title insurers to take the legal steps necessary to fix or delete fraudulent transfers and fraudulently registered mortgages, the consequence of which could otherwise be devastating.
So, what is title insurance? In general terms, it is insurance to protect property owners and lenders against certain losses related to the property's ownership and interests in it. It is available in Ontario from several insurers, including FCT,2 Stewart Title Guaranty Company,3 Chicago Title (Canada),4 and TitlePLUS.5
What does it cover? The title policy in question will set out what insurance is provided. Generally speaking, however, title insurance will cover, among other things, fraudulent registrations against the property, unknown title defects which may affect ownership, some liens, encroachments and right-of-way issues, and errors in surveys and public records.
What does title insurance cost? Like other insurance, you need to pay a premium to obtain it. Unlike most other types, the premium is a one-time payment, usually a few hundred dollars, and, best of all, the insurance normally continues as long as you own the insured property.
Mr. Hudak's recommendation constitutes good advice. Every homeowner should, at the very least, consider title insurance. A good place to start is to ask your lawyer about it, especially before you buy your home.
Footnotes
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.