Title Insurance: What It Is & Why You Should Consider It

Credit: Scott Graham / Unsplash

Credit: Scott Graham / Unsplash

There isn’t any industry standard that suggests that title insurance is necessary or even available. Given the protection it provides, though, buyers may be well advised to consider purchasing title insurance at the time their lawyer conveys title to their new home.

What is Title Insurance?

Title insurance is a policy provided by title insurance companies that protect residential or commercial property owners against losses related to a property’s title or ownership. While coverage differs from company to company, some of the coverage includes: coverage for unknown title defects; errors in surveys or public records; losses related to improvements made without the proper building permits; existing liens against the property’s title for unpaid debts by the previous owner; real state fraud and forgery; encroachment and unregistered easement issues.

Generally, it does not cover known title defects, environmental hazards, native land claims, matters created by the insured, or matters known to the insured but not disclosed to the title insurer before completion – and this would include matters identified in a home inspection. It is usually purchased at the time of the house purchase for a one-time premium, which is typically determined by the property’s value.

Why Should You Consider It?

While the following examples may be exceptional, they to make a good case for insuring titles:

  1. Buyer has municipality conduct a site inspection of the property after experiencing plumbing problems. City inspector found numerous problems with the dwelling, as well as illegal gas and plumbing lines, and an unpermitted addition to the garage. City issued on Order to Comply. Cost of claim? $270,797.

  2. Buyer received notice from the City that the basement apartment was built without obtaining required development or building permits. City ordered buyer to legalize or remove the apartment. Cost of claim? $239, 958.

In summary, purchasing title insurance can prevent you, as a buyer, from getting into some hot water. If you’d like to learn more about title insurance, be sure to speak to one of our many qualified real estate agents.

About the Author

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Sue Russell
Sue Russell

After decades in post-secondary education, Sue was looking for self-employment in a field that would allow commitment and hard work to be reflected in earnings. Real estate seemed a good fit. Sue knows what it is like to enter this business with no sphere of influence as she started in 1994 after a recent move to the Comox Valley, and after her three sons had grown up and left home—she knew no one in the Valley except her husband!

Using her background in adult education and in administration, Sue built a “service based” business and has enjoyed the rewards, financial and emotional, that have gone with a successful career in this fascinating people business. A firm believer that education is a lifelong process, Sue holds additional licenses as managing broker and in property management, continues to teach and train, and advocates strongly for continuing education. Although still somewhat active in the field, Sue has spent more time in the past eight years supporting various managing brokers at RE/MAX Ocean Pacific Realty. Managing the brokerage in Dave’s absence, supporting Dave when he is present, supporting property management, training, and mentoring, as well as providing answers regarding contract questions fills Sue’s days full indeed. One thing is for sure: there is never a boring day in the real estate business.

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Sue Russell