Mortgage Title Insurance in Canada: What You Need to Know

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Overview Of Title Insurance In Canada

Many people are unfamiliar with what title insurance is and why it’s necessary. The ownership of your home can be contested by one of the previous owners who was not consulted for the sale and transfer of the title to you. It also can be affected by unpaid debts of the previous owners that were secured against the property. All these issues can cost you money, time, and even your house.

With title insurance coverage, if a third party contests your title or ownership, you have assurance from the insurer that they will cover the costs of regaining your full ownership rights.

We will cover everything you need to know about Title Insurance to make the right decision.

What Is Title Insurance?

A title insurance policy protects the new homeowner and their mortgage lenders from legal challenges to their property ownership.

It protects against liens on the property and any outstanding debts. It also protects against

mistakes made in recording the deed.

The property’s new owner pays one lump sum for the insurance premium before taking ownership. Title insurance can save you from losing your new home due to prior liens or mistakes.

It is vital to have this protection because many hazards can happen to the property from things caused by the previous owners.

Just like any other insurance policy, there is a cost. It must be incurred as part of your house buying costs if you want to enjoy the safety of knowing that your house title is protected.

How Title Insurance Works

Title insurance can seem overwhelming and complicated, but it’s pretty simple once you know the ins and outs!

When you are getting a mortgage to buy your house, mortgage lenders will often require title insurance to protect their financial interests in the property.

Your attorney will handle the transaction to get your title insured.

If a third party contests your title, you have assurance from the title insurer that they will cover the loss incurred to perfect the title.

The policy will also cover your loss as a result of title defects. These defects usually don’t show up until after the completion of the purchase.

The policy may vary from provider to provider, but the coverage works the same regardless of whom you buy your policy.

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Is Title Insurance Required?

Title insurance is not required in Canada, but mortgage lenders may need it, especially if the property does not have a building location survey.

Getting title insurance is a worthy investment because it protects you and the lender if there is any confusion or dispute about property ownership. The insurance policy protects you against existing liens, defects, encroachments, and more.

What Does The Title Insurance Cover?

Your title insurance will cover the risks listed below. These issues may jeopardize your title or ownership of the property.

Unpaid liens (debts from utilities, mortgages, property taxes, or condominium charges secured against the property) of the previous owners
Removal of your property’s structures

Fraud and forgery of your property ownership title
Survey and public record errors
Unknown title issues that may limit your ability to sell, lease or mortgage the property

Your title insurance will not cover environmental hazards, defects you were aware of before buying the property, issues not listed in the public record, and zoning bylaw violations.

Therefore, it is essential to read the fine print of your policy to know what it covers and doesn’t before buying it.

Types Of Title Insurance

What Is Owner's Title Insurance?

Owner’s title insurance protects an individual purchasing a property from the risks of ownership. This insurance policy is not required to take ownership of a property but is recommended when buying a property.

If there are liens or judgments against the property, you risk losing your purchase without an owner’s title insurance.

What Is Lender's Title Insurance?

A lender’s title insurance protects the lender’s financial interest if the property title or ownership is contested. A lender will typically require this protection before handing over a mortgage loan.

Lender’s title insurance helps protect the lender against issues arising from fraudulent deeds, incorrect information on the act, improper liens, or other claims on your property.

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What Does Title Insurance Cost?

The title insurance premium is paid once upon closing and valid for the entire time you own the property.

Many factors determine the cost of title insurance, including the risk associated with your property, home size and age. The cost also varies based on the province or territory the property is in.

Ontario

The average title insurance in Ontario is $250.

Alberta

Title insurance in Alberta can range up to $175.

British Columbia

BC’s average title insurance policy cost is $175 – $225 for the lender’s insurance and $50 for the owner’s insurance.

Who Pays for the Title Insurance?

The property buyer pays for the owner’s and lender’s title insurance.

Final Thought On Title Insurance In Canada

Title insurance is a type of insurance policy that protects property owners and their lenders against losses associated with defects in the title of their property. This policy also protects the property owner from any losses incurred by defects in the title.

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Mortgage Title Insurance in Canada: What You Need to Know

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In This Guide

Overview Of Title Insurance In Canada

What Is Title Insurance?

How Title Insurance Works

Shop Across 25+ Lenders For Your Best Mortgage Deals

Is Title Insurance Required?

What Does The Title Insurance Cover?

Types Of Title Insurance

What Is Owner's Title Insurance?

What Is Lender's Title Insurance?

Shop Across 25+ Lenders For Your Best Mortgage Deals

What Does Title Insurance Cost?

Who Pays for the Title Insurance?

Final Thought On Title Insurance In Canada

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