Title insurance has become a topic of conversation recently thanks to a recent real estate scam. The first reported scam happened in Etobicoke. It involved two individuals who allegedly impersonated the owners of a home and sold it while the owners were away. Since then, a number of other incidents have been reported and they have all highlighted the dangers of real-estate title fraud.
So what do you do if you find that the registered owner of your home is someone whom you have never heard of? Or there is now a whopping $700,000 mortgage on it to which you did not agree?
Reporting the matter to the police can be important, but it will not reverse the fraud.
How do you protect yourself?
Tim Hudak, of the Ontario Real Estate Association, says you should get title insurance for your home. “Under title insurance your possession of the property is protected and insured. You’re eligible for compensation.”
So, what is title insurance?
In general terms, it is insurance to protect property owners and lenders against certain losses related to the property’s ownership and interests in it.
It is available in Ontario from several insurers, including; FCT, Stewart Title Guaranty Company, Chicago Title (Canada), and TitlePLUS.
Title insurance will cover, among other things,
- fraudulent registrations against the property,
- unknown title defects which may affect ownership,
- some liens, against the property’s title, such as unpaid debts secured against the property by a previous owner, including;
- Utility bills
- Mortgages
- Property taxes
- Condominium charges
- encroachments,
- right-of-ways,
- errors in surveys and public records.
Title insurance lasts for the entire time that you own the home. As well, most residential title insurance policies extend coverage to:
- Your heirs through a will
- A spouse in the event of a divorce
- Children, if the parents transfer the property to them
How much does it cost?
Title insurance is also relatively inexpensive. It typically costs a dollar for every thousand dollars of value. That would mean that for a $1 million home the insurance would be $1,000. That’s a one-time payment and though it is typically bought and arranged during a home sale it can also be purchased years later.
This type of insurance is not a requirement in Ontario. Which means, you should discuss whether you need it with your lawyer, title insurance company or insurance agent. Then you can make an informed decision based on your specific situation and needs.
Alternatively, though far less convenient, you can protect the title of your home by getting a Duplicate Title Certificate from the land title office. Having the Duplicate Title does protect you since it has to be presented in order to register a transfer. However, you must retain the Duplicate. Great care should be taken to ensure that it is not lost or destroyed as it is costly and time consuming to replace.