What Is Real Estate Title?
If you are a first time buyer, you may feel a little overwhelmed by all the real estate buzz words flying around you. Pre-approval, land transfer, mortgage insurance, these are all phrases you will hear as you go through the process of buying a home. But one of the most important term you will hear is real estate title.
When you buy a home, you are in fact purchasing the title to the land. You are acquiring the right to use and occupy the space. You will gain the title to the property when the current homeowner signs the deed over to you. Following which, the title is registered with the provincial land titles office.
But what is a real estate title? Ownership of a piece of real estate is demonstrated by a title which is a legal document that specifies who is the owner of this particular property. When a house is sold, title of the property is transferred to the new owner with the help of a real estate lawyer or notary. Before you finalize the purchase of the home, your real estate lawyer will do a title search of the public records. This search will show all the transactions that have had an impact on the title of the property such as sale, inheritance, etc. However, this search will not uncover hidden issues or defects with the title such as forged documents, liens, outstanding taxes, etc.
This is where title insurance comes in. A buyer can protect his investment by purchasing title insurance against unknown defects with the title. A title may be restricted by claims or rights of others. Unfortunately, these issues are not always discovered prior to closing. A title insurance will protect you agains such unforeseen situations.
Title insurance is not required in all provinces. You should speak to your lawyer to establish whether you should buy title insurance or if there are other options available to you. Policies for title insurance can be in favor of the buyer, the lender or both. In some cases, the lender may demand that title insurance be purchased as a condition to the mortgage loan.
A title insurance will cover such things as unknown title defects which would prevent you from enjoying clear ownership of the home. They also offer protection from losses such as existing liens against title, encroachment issues, title fraud, errors in surveys or public records, etc.
Title insurance coverage for a residential home lasts for as long as you own the property. It is a one time fee for the premium and the policy can be transferred to an heir or a spouse in the event of a divorce. It can also help to ensure that closing is not postponed due to issues in the title. And if issues where to come up later one, the title insurance would covers your legal fees and expenses associated with defending your title. Even though it is not mandated in all provinces, your title insurance premium is a small price to pay for peace of mind.
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