Hi all,
I am little baffled by the fact that an innocent property owner has to shell out extra money to protect from fraud where provincial Govt. has done nothing yet. I am posting this as I haven’t come across much clarification regarding this in this or any other forum and recently many agencies are promoting this product in the market and trying to cash on the fear of general public (btw all the insurances are nothing but the same) I am not sure if proposed legislation will have enough teeth. Does anyone have details of that? Also is it imperative that a house owner considers taking Title Insurance? What kind of property (Condo, Townhouse, Independent house, or any free hold) owner is most exposed to fraud and should consider such Insurance? Also, should one consider the insurance only after full title?
Sorry to have posted so many questions on this. I am not much aware of this as this being newer kind of insurance offered. I am not sure if use of Teraview has to do a lot with increased property related frauds. Also is it normal for a lawyer to safe keep the property documents (especially when I am still paying the mortgage)?
Thanks a lot in advance.

Title to property

Title is the legal term for ownership of property. Buyers want "good and marketable" title to a property - good title means title appropriate for the buyer's purposes; marketable title means title the buyer can convey to someone else. Prior to closing, public records are "searched" to determine the previous ownership of the property, as well as prior dealings related to it. The search might reveal, for example, existing mortgages, liens for outstanding taxes, utility charges, etc., registered against the property. At closing the buyer expects property that is free of such claims, so normally they must be cleared up before closing. For example, the seller's mortgage will be discharged and outstanding monetary expenses (such as taxes and utility charges) will be paid for (or adjusted for) at closing.

Sometimes problems (or defects) regarding title are not discovered before closing, or are not remedied before closing. Such defects can make the property less marketable when the buyer subsequently sells and, depending on the nature of the problem, can also cost money to remedy. For example, the survey might have failed to show that a dock and boathouse built on a river adjoining a vacation property was built without permission. The buyer of the property could be out-of-pocket if he is later forced to remove the dock and boathouse. Or, the property might have been conveyed to a previous owner fraudulently, in which case there is the risk that the real owner may come forward at some point and demand their rights with respect to the property.

Who is protected with title insurance?
Title insurance policies can be issued in favour of a purchaser (on new/resale homes, condos and vacation properties), a lender, or both the purchaser and lender. Lenders will sometimes require title insurance as a condition of making the loan. Title insurance protects purchasers and/or lenders against loss or damage sustained if a claim that is covered under the terms of the policy is made.

Types of risks that are usually covered under a title insurance policy include: survey irregularities; forced removal of existing structures; claims due to fraud, forgery or duress; unregistered easements and rights of-way; lack of pedestrian or vehicular access to the property; work orders; zoning and set back non-compliance or deficiencies; etc. For a risk to be covered, generally it has to have existed as of the date of the policy. As with any type of insurance policy, certain types of risks might not be covered, for example, native land claims and environmental hazards are normally excluded. Be sure to discuss with your lawyer what risks are covered and what are excluded.

The insured purchaser is indemnified for actual loss of damage sustained up to the amount of the policy, which is based on the purchase price. As well, some policies have inflation coverage, which means that if the fair market value of the property increases, the policy amount will also increase (up to a set maximum).

How long is the Title insurance coverage and what are the costs?

In the case of title insurance covering the purchaser, title insurance remains in effect as long as the insured purchaser has title to the land. Some policies also protect those who received title as a result of the purchaser's death, or certain family members (e.g., a spouse or children) to whom the property may have been transferred for a nominal consideration.

In the case of title insurance covering a lender, the policy remains in effect as long as the mortgage remains on title. A lender covered under a title insurance policy is insured in the event the lender realizes on its security and suffers actual loss or damage with respect to a risk covered under the policy. Lenders are usually covered up to the principal amount of the mortgage.

The premium for title insurance is paid once (at the time of purchase).
Generally speaking, in Canada the purchaser of the property pays for the title insurance, though there can be situations where the seller pays for it. Some policies automatically cover both the purchaser and lender; others will cover both for a small additional fee.

A residential title insurance in Canada for a typical home of less than $500,000 costs approx $200plus taxes. See some title insurance company links on my website http://www.realestate-ontario.com/links/lawyers.htm

Protection and peace of mind-Title insurance can help ensure that a closing is not delayed due to defects in title. And, if an issue relating to title arises with respect to a risk covered under the policy, the title insurance covers the legal fees and expenses associated with defending the insured's title and pays in the event of loss.

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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/

Thanks a lot Amit for clearing that up. However, if I bought the property and my lender and my lawyer have done the background check for the said property do think there would still be a problem with it? I am less concern about this aspect of the issue. However, my main concerns are the issue arising due to fraudulent ID theft and problems associated with that. Now what kind of properties is prone to such ID related frauds? Newly financed once or those where the entire mortgage is paid off?

Also is it normal for a lawyer to safe keep the property documents (especially when I am still paying the mortgage)? Sorry I asked this in my last post too.
Thanks

Quote:

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Originally posted by Ranin

Now what kind of properties is prone to such ID related frauds? Newly financed once or those where the entire mortgage is paid off?

Also is it normal for a lawyer to safe keep the property documents (especially when I am still paying the mortgage? Sorry I asked this in my last post too.
Thanks

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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/

Thanks a lot Amitji for your kind replies. I stumbled upon this file while I am researching on the topic, which I thought I would share with you and in the forum. I would appreciate your comments on this. Although it is an Australian report available on the Law Society of Alberta website link:
http://www.lawsocietyalberta.com/files/reports/Western_Torrens_12dec02.pdf
but has some relavent mentions of Canadian title insurance Industry and I am including some excerpts from it for your benefit here. My question still remains, is it really necessary?
Title insurance: Is it wanted here?
“the salient attribute of traditional title insurance is that most of the risks it covers have already occurred when the policy is issued.2 Furthermore, the common standard clause explicitly excludes coverage of any defects arising after the date of the policy. In other forms of insurance risk assumption is the standard practice: by purchasing a policy, the insured party is covered against the future and uncertain risk.
Arrunada asserts that, in general, title insurance covers against risks associated with facts that already exist, but which are unknown when the policy is issued and may or may not be discovered in the future. As the residual claimant, the insurer is keen to locate any title defect before issuing a policy and either purge or exclude it from coverage. The insurer is also keen to make sure that a correct settlement of the transaction takes place.”
And..
“Curiously, although title insurance is widespread in the US, one state, Iowa, banned it in 1947. An opinion offered by Carl Nielsen, the executive director of the Iowa State Bar Association, is that “Consumers are better off using abstracts and attorneys’ opinions. Title Insurance destroys abstracts. They insure over defects. Iowa lawyers clean up title defects and record everything done in the course of that cleanup”.
Further…..
“The risk in Ontario is so low that title insurers in Ontario are laughing their heads off. Is there a title in Ontario that can’t be fixed? The insurers are feeding off the good job lawyers have done for years”

Also from following link:
http://www.aols.org/boundariesandland/titleinsurance.asp

"Canadians, unlike their neighbours to the south, have traditionally relied upon surveys of the properties they were about to purchase to reveal information about the property that was not available solely through the title records.

When a survey is made, the municipality can be contacted to confirm that the building(s) on the property conform to the zoning and building by-laws. A current survey will alert a purchaser or lender to any problems such as recently built additions, outbuildings or garages that extend beyond the property limits or contravene the municipal by-laws. The survey will reveal the existence of easements, rights-of-way or encroachments and any disparities between the legal description of the land and the extent of occupation.

Over the last ten or fifteen years a large majority of properties in Ontario have been sold or mortgaged, often several times, and have had title reviewed on each such occasion. If, during such review the lawyer found a minor flaw in a document, or questioned the manner in which an estate had been settled or a mortgage or lien discharged, or if the survey had revealed problems with respect to the extent or occupation of the lands, he or she would normally have worked with the vendor's lawyer to remove the cloud on title which such flaw or question may have created.

If it were impossible to remedy the problem with respect to quality or extent of title, the lawyer would have advised his or her client that the transaction should not be completed or, if appropriate, a reduction in the price of the property would be negotiated.

Where remedial action has been taken, in the course of investigating title, it has had the effect of cleansing or refreshing title. As a result, the vast majority of properties in Ontario have clear marketable title and property owners are well informed as to the quality and extent of their title."

Quote:

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Originally posted by Ranin

Thanks a lot Amitji for your kind replies. My question still remains, is it really necessary? Title insurance: Is it wanted here?

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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/

Thanks Amitji,
After your post, I discussed with my lawyer and he suggested that I don't need such insurance, and need not bother.