Why you Should Always Purchase Title Insurance

You’ve found the perfect home, put in an offer and it has been accepted. The deposit has been paid and all conditions fulfilled. Your real estate lawyer is now your point person who will prepare all necessary documents and close the transaction.

Sometime during this process your lawyer will ask if you’d like to purchase title insurance. While optional, you should never pass on this policy.

Why?

Because it may help protect you from financial hurt if issues arise with the property’s title — the legal term for the right to own a piece of land. (Remember, you’re buying more than the physical structure.)

In other words, title insurance protects your ownership against any losses you might incur because of undetected or unknown title defects. A so-called defect is anything on title that prevents the owner from having clear title to the property. This can include outstanding liens (unpaid bills, property taxes or other debt) or encumbrances (errors in deeds) and could result in the termination of the sale.

Title insurance also covers you in the event of someone else claiming an interest in the property, fraud or forgery (for instance, someone tries to sell the home from under you or apply for a new mortgage against it) and encroachment or survey disputes.

Of course, title insurance doesn’t cover everything that might go wrong with your house. For instance, it won’t help with known title defects at the time of purchase, environmental issues like soil contamination or issues discovered when a new survey is performed.

Unlike most insurance policies, title insurance is paid once for a cost of $250 to $400. While generally purchased before closing from one of the major providers — Stewart Title, First Canadian Title, Chicago Title, Travelers and TitlePlus — you can also buy it at a later date.