Buying a home is an exciting time! Perhaps you have finally found the perfect place to call your own, and you are ready to make an offer. What you may not consider is that there are many potential pitfalls to avoid when purchasing property.
To help protect yourself, you may purchase title insurance, which may compensate you if there are issues with the transaction or the property itself.
For example, someone else might hold an interest in the property, and that interest may not be registered at the Land Title Office. In these situations, you, as the titleholder and owner of the property, may experience a significant financial loss due to the title defect.
This article will help explain what title insurance means for you and how it works to protect you.
What Is Title Insurance?
The word “title” relates to your right of ownership over land you purchased. When you purchase property, the title is transferred from the previous owner to you.
It is possible you may experience challenges relating to the title and ownership of your property. Title insurance is a policy that covers any losses caused by those challenges. In other words, title insurance is protection against the financial consequences of a title defect in your property.
Title insurance extends protection to both the lender and the homebuyer. So, if the title defect affects your mortgage loan repayments, the lender will be protected from that loss.
Examples of title defects include:
- another party is still considered the title holder (i.e. the ownership of the title isn’t clear);
- incorrect signatures on title transfer documents;
- forgery and fraud;
- zoning violations;
- outstanding tax liabilities;
- outstanding judgements against the property;
- encroachments; and
- unrecorded easements or servitudes.
Do You Need Title Insurance in BC?
The BC Land Title Registration Office does not require title insurance because they guarantee the title to your property. However, your lender may require it as a condition of your mortgage.
Title insurance is an important consideration for all homeowners, but it is not one-size-fits-all.
If you’re purchasing or refinancing your home and are unsure if title insurance may be right for you, speak to your lawyer or notary about the process of arranging this coverage so that they can make recommendations on whether it will work with your specific situation.
Title Insurance FAQS
Here are some answers to frequently asked questions regarding title insurance:
Q: How much does Title Insurance cost?
This is completely dependent on the type of coverage you take out and how much your property costs. In British Columbia, you can expect to pay an average fee of around $175 – $350.
The fee is divided between the Lender Policy and the Owner Policy. Generally, 75% of the fee is allocated to the lender’s policy, while the remaining 25% is with respect to the owner’s policy.
Title insurance differs from home insurance in that it is a one-time fee, so you do not pay monthly premiums. Once you pay the one-time fee, you will remain covered for your entire period of ownership of the property.
Q: What is the difference between a Lender Policy and an Owner Policy?
An owner’s title insurance policy protects you from potential loss. For example, if it becomes clear that someone else is the true titleholder of the property, the policy will cover your loss.
On the other hand, a lender’s title insurance policy protects the organization from which you obtained your mortgage loan. For example, if you default on your mortgage repayments as a direct result of the title defect, the lender will be protected from that loss.
Q: How do you order title insurance?
Once you have entered into a contract to purchase property (or if you are refinancing your property), you can simply request that your lawyer order title insurance for you.
Title insurance is a type of insurance that protects the property owner and lender against loss or damage caused by problems with the title to the land. It is important for anyone who plans to buy property or refinance to research what sort of title insurance they need.
If you have more questions about how title insurance works, why you might need it, or want help determining your needs, please contact us today at Solimano Law. Our team will be happy to help answer your questions.
Disclaimer – The information contained herein is of a general nature. It is not intended to be legal advice and it is not intended to address the exact circumstances of any particular individual or entity. No one should rely on or act upon such information without receiving appropriate professional advice and without a thorough examination of their particular situation. Please contact our office if you have any questions with respect to the content of this entry, this website, or our Terms and Conditions .