Real Estate Tidbits: Title Insurance

Brought to you by  KENNEDY Real Estate 

This is a great article for Realtors/Lawyers/Mortgage Brokers and of course Edmonton BUYERS and SELLERS. There is much confusion about this topic. We were fortunate enough to have the opportunity to have Bhavna Chavda from FCT (First Canadian Title) come to our office for one of our team meetings and give us the skinny on Title Insurance. This is what we learned…

Title Insurance: what does it mean to you? If you haven’t purchased a  home before, chances are it doesn’t mean much. If you have, Title Insurance may set off some alarms in your head. You’ve probably become convinced that a Real Property Report is the only way to go. But does Title Insurance deserve this bad rep?

Let’s start by defining these two terms.

Real Property Report: A Real Property Report (RPR) provides information such as the location of utility right-of-ways and easements.  It also shows boundary fences, the overhangs of eaves and additional improvements such as swimming pools and hot tubs.  As a seller, you need to make sure that your RPR is up to date and has municipal compliance before selling your property.  Not having this can delay the sale and cause a lot of delay when it comes to transferring title from seller to buyer. Lenders will also need to know about issues with the RPR and make sure they are resolved before lending money on the property.

Title Insurance: Title insurance is an insurance policy that protects you, the home owner, against challenges to the ownership of your home or from problems related to the title to your home. The policy provides coverage against losses due to title defects, even if the defects existed before you purchased your home. A title defect is a problem with the title which prevents free and clear ownership. There are many types of defects such as rights of way, encroachments (from neighbouring properties), unpaid liens, etc.

Are you in the process of trying to sell a home, and is the Real Property Report causing you closing delays? Here’s how a title insurance policy may help you.

Did you know that a title insurance policy:

• is accepted by most lenders in lieu of an up‐to‐date Real Property Report (RPR);
• can provide coverage over known RPR problems and offers protection from loss if the land is unmarketable as a result of defects that would have been revealed by an up‐to‐date RPR;
• provides protection against real estate title fraud and issues such as unpaid liens, title defects, encroachment issues, construction liens, and costs arising from building code violations.

It also provides coverage for purchasers:

• Unmarketablility of the title or land
• Liens, including tax liens; Builder’s liens
• Easements; Work orders; Lack of building permits
• Someone else owning or claiming to own an interest in the property
• Documents not properly signed, sealed or delivered
• Fraud, forgery or incapacity (including post‐policy coverage)
• Defective registration of documents
• Registration gap coverage
• Lack of access; Restrictive covenants
• Encroachments; Neighbour’s encroachments built after purchase
• Adverse matters that would have been disclosed by a local authority search or an up‐to‐date survey

So, if you ever find yourself in a situation where an RPR is too costly or time-consuming to obtain, you can always consider Title Insurance as a viable option.

source: www.firstcanadiantitle.com

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