Do I Need Title Insurance When Buying a Home?

Ready to buy a home? Is this your first time? If so, congratulations! You’re on your way to making one of the best (and biggest) decisions in your life. A home of your very own is a thrilling prospect, and it’s a life goal for some.

But for many, the process of buying a home can also be very stressful. It’s a lot of money to invest, and not to mention the fact that there’s all that real estate mumbo jumbo that no one (save real estate professionals) really fully understands.

While Excalibur can’t help you navigate the complexities of the real estate world, we can give you some insights into insurance. Title insurance. It’s a lesser-known insurance product, but it might be helpful when you’re in the process of home buying. Let’s get into it.

What is title insurance and what does it cover?

When you are purchasing a home, the previous owner of that property will need to sign a deed over to you. This deed is also referred to as the title. Once the title is in your possession, you legally have ownership of the property. Title insurance is a form of protection that covers you for losses relating to your ownership and the transfer of the deed to your name. Title insurance is interesting because the way its premiums are paid are not monthly – so you will have protection after paying a single one-time fee. We’ll go into those costs later on.

Your title insurance covers you for:

• Unknown title defects that could affect the ownership of the property
• Existing liens or unpaid debts against the property title by the previous owner, such as:
  • Title fraud
  • Property taxes
  • Mortgages
  • Utility bills
  • Encroachment issues
  • Errors in public records and surveys
  • Condominium charges
  • Title issues that could impact your ability to lease, mortgage, or sell in the future

These issues aren’t particularly common, but they can be devastating. Having title insurance is a great way to mitigate any other unexpected, additional costs that could occur.

Title insurance will not cover any of the following:

• Issues discovered by an inspection or new survey of the property
• Matters not listed publicly
• Environmental hazards
• Native land claims
• Known title defects
• Zoning bylaw violations

Also note that title insurance is not property insurance and only covers issues relating to the property’s ownership, not the property itself. To cover the property, you would need to acquire separate home insurance – which you should with any investment that costs as much as a home does.

How much does title insurance cost?

Title insurance is charged as a one-time premium, and the cost can vary depending on the insurance company you purchase through as well as the overall value of the property. Title insurance stands for as long as you own the property, and it can be passed down to your heirs, children, or spouse.

You can purchase title insurance through a lawyer.

Do I really need title insurance?

Title insurance, much like home insurance, is not a requirement but highly recommended nonetheless. It can offer you and your critical investments essential protection. It covers you against any losses relating to your property ownership as a standard protection, but with additional purchases it can cover you for having to need a property survey again after your purchase. Gap coverage can cover your investments during the time between the home closing date and when you first register for ownership with Ontario’s land registration system.

Finally, legal coverage can protect you if the ownership of your home has you defending it in court. Because this is one of the most expensive legal expenses, it’s not a bad idea to consider this coverage.

So, do you really need it? Title insurance may or may not come in handy, but when it does, you’d be glad you had protection. Some expenses can really add up, and after the purchase of a new home, you wouldn’t want to be spending any extra cash.

What is title fraud?

If you purchase a home that was sold by a fraudster, you could become the victim of title fraud. See, title fraud can cause you harm if you purchase or lease a home. The fraudster will use the title to secure a mortgage on your home, and then vanish with that money! You can visit Ontario.ca to see how it’s possible to receive compensation for someone who has been the victim of fraud.

Many title insurance policies will contain legal terminology, which can be more complex than your standard insurance policy. If you have questions, don’t hesitate to get in touch with your lawyer or a legal professional to clear things up.

Additionally, as a new homeowner, you should be purchasing home insurance! Excalibur’s Rate Reducer can help you find the best home insurance rates in Ontario, and after a big purchase like buying a new home – who isn’t looking to save some money? Try out Rate Reducer here.