Most homeowners regularly review their home insurance policies and coverage to ensure they have adequate insurance in place in the event something were to happen to their home, such as fire or accidental damage.
But what if something happens that impacts the title of your property? Will your home insurance policy protect you?
The answer is no. You need title insurance.
While it won’t protect you in the event of a fire, title insurance will protect you from real estate fraud and/or other claims that may impact your ownership of your property.
Title insurance will cover things such as real estate fraud (a growing concern these days), typos and minor errors in the legal description of your property, unpaid utilities, mortgages, taxes, or condo maintenance fees by previous owners. Removing existing structures if they violate zoning laws may also be covered.
Title insurance does not provide coverage for things that are wrong with your house or issues related to poor maintenance. Some non-title issues that are generally excluded include:
- Zoning by-law violations from home renovations or additions that you were responsible for
- Burglary or home theft
- Environmental hazards, such as soil contamination
- Known title defects that were revealed before you bought the property
- Wear and tear of your home and property
Title insurance also covers title fraud (commonly referred to as real estate fraud), which involves people using false or stolen information and documents to transfer or encumber your property without your knowledge.
By comparison to the ongoing cost of home insurance premiums and the financial impact a title issue can have, the cost of title insurance is relatively inexpensive. There is a one-time premium payment that provides coverage for so long as you own your property, unlike home insurance which must be renewed annually. Title insurance can be purchased at the time that you purchase your property and your real estate lawyer should discuss this with you.
If you own property and do not currently have title insurance in place, you should speak to a real estate lawyer who can assist you in purchasing a policy specifically for existing homeowners from a reputable title insurance provider.
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This WARDS LAWYERS PC publication is for general information only. It is not legal advice, nor is it intended to be. Specific or more information may be necessary before advice could be provided for your particular circumstances.
