Should New Homeowners Get Title Insurance?
Title insurance helps protect you, as the new homeowner, against challenges to the ownership of your home or from problems related to the title to your home.
When you buy a home, the previous owner must transfer the deed over to you as the new homeowner. The deed shows who has title, or legal ownership, of the home.
What is title insurance?
Title insurance is an insurance policy that protects you, the new homeowner, against challenges to the ownership of your home or from problems related to the title to your home.
A title insurance policy provides coverage against losses due to title defects, even if the defects existed before you purchased your home.
What are title defects?
A deed, or title, can be fraudulent or incorrect and it can be possible for someone to challenge new homeowners and their ownership of their home.
There can be title defects, which prevent free and clear ownership of your home. Title defects can include rights of way, encroachments from neighbouring properties, or unpaid property taxes, for example.
Title defects can prevent you, as the new homeowner, from having clear ownership to your home as a new homeowners and it may affect your ability to see your home in the future.
What does title insurance cover?
Title insurance covers title fraud or forgery. It covers encroachment or survey disputes. For example, if your neighbour builds a fence on your property. It also covers liens against the title, such unpaid property taxes or debt, errors in public records, and mortgage fraud.
What doesn’t title insurance cover?
Title insurance typically doesn’t include:
- Known title defects at the time of purchase
- Indigenous land claims
- Environmental issues and hazards, such as soil contamination.
- Anything that doesn’t already exist in the public record
- Issues that are only discovered when there’s a new survey or inspection of your property
- Any additions or changes to your property that you have made
Where do I get title insurance as a new homeowner?
You can usually buy title insurance through your real estate lawyer during the closing process, but you can also get it through an insurance broker. Ask your Western Financial Group home insurance expert about title insurance.
When you are buying a home, your mortgage lender may require you to buy title insurance in order to protect themselves as the lender.
It’s important to know that title insurance isn’t a substitute for home insurance. Home insurance doesn’t protect you against title fraud.
The title insurance premium is usually due at the time of closing for those buying a home. Some title insurance insurers allow you to buy title insurance at any time.
What are pros of title insurance?
- It’s a one-time cost, usually several hundred dollars.
- Peace of mind
What are the cons of title insurance?
- Title insurance does not protect against future issues, such as zoning changes or code violations.
- It can be viewed as unnecessary because some new home buyers feel that the chances of something going wrong with the title to their property are slim.
