Title insurance is an insurance policy that protects the buyers and the lender’s interests against losses that may arise with respect to the property’s title or ownership.
In Alberta, we have the Torrens System to register title, which means that as a buyer, your title is guaranteed by the province. If there is a title defect, the Torrens System prevents a seller from going back in history, finding a technical flaw in a historical transfer and then claiming title.
In addition, the system allows you to fully rely on the registrations that are registered at the Alberta Land Titles Office.
So, why is having title insurance important?
Beyond the Torrens System, title insurance is an additional form of protection for a buyer and their lender during a real estate purchase and after they own the home. It’s important because it helps to prevent financial losses from:
- Fraudulent real estate transactions, such as situations where fraudsters impersonate homeowners to obtain mortgage financing.
- Violations of municipal zoning by-laws and building permits.
- Existing liens registered against the property’s title, such as unpaid utility, mortgage, condo charges, and property taxes from the previous owner.
- Errors in surveys and public records; and
- Unknown title defects that prevent the buyer from having clear ownership of the property which may impact their ability to sell, lease or mortgage their property in the future.
Please note: Every insurance policy will have a detailed list of what risks the specific policy insures.
What is typically not covered under title insurance?
Possible exclusions to title insurance may include:
- Title defects that you knew about before purchasing your property.
- First Nations land claims.
- Issues only discoverable by a new survey or property inspection.
- Problems not listed in public records (such as unrecorded liens and encroachments) and
- Zoning bylaw violations that you are responsible for creating.
Remember: It’s important that you read the terms of your insurance policy to fully understand the exclusions from your coverage.
How much does title insurance cost?
People purchase title insurance from an insurer (usually by the buyer of a home or an existing homeowner) and costs a one-time fee, called a premium, that varies depending on the value of your property. Typically, a home valued at under $500,000 will cost around $250 to $350.
How long does my coverage last?
Title coverage lasts as long as the client will own the property and covers losses up to the maximum coverage set out in the policy. Most policies even extend coverage to heirs (through a will), to a spouse in the event of a divorce, and to children when a parent transfers property to that child or children.
Many people contact Kahane Law with real estate related problems years after they bought a home and forgot that they had purchased this protection.
If you have any questions or concerns, please do not hesitate to contact Kahane Law Office and their skilled team will be happy to assist you with your questions. You can call at 403-225-8810 or email at realestate@kahanelaw.com.
