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What is Title Insurance?

Fake Out Frauds

Fraudulent activity has escalated from cheque-writing scams to identity theft to actually stealing your home right out from under you.

What many homeowners don't realize is that title insurance could prevent or assist in correcting fraudulent activity.

For a one-time fee (that in many cases works out to less than the annual premium for an average homeowner's insurance policy), title insurance protects a purchaser against anything that may hinder clear possession of the property.

This coverage will pass to family members, as in the case of an inheritance.

Title insurance is purchased when title is conveyed. It is usually acquired through the lawyer handling the transfer of ownership, and actually may eliminate the need for thorough title searches.

It is also no-fault insurance so that if a problem arises, you simply make a claim, unlike the traditional process of having to prove negligence on the part of the lawyer conducting the searches.

Title insurance ensures clear title, but it also:

-Covers undischarged liens or mortgages that may go back many years, or have been lost in the land registry system

-Covers fraudulent mortgages placed on a property unbeknownst to the owner. The average case of real estate title fraud costs the victim $300,000; the average credit card fraud in Canada is $1,200.

A criminal will typically do one of the following:

-Forge property transfer deed

-Register title to the property in his or her name

-Forge a discharge of the home's existing mortgage and then borrow against clear title

-Cover up unpaid taxes or utilities

-Hide encroachments on a neighbouring property, or build problematic renos outside municipal bylaw or setback requirements

-It also provides for any changes to a property where appropriate permits are not obtained. Situations like these can cost considerable amounts of money to rectify, even before the legal bills begin to pile up.

-Most major financial institutions accept title insurance in lieu of a survey.

Even if you already own your home and do not currently have title insurance, it would be well worth the phone call to your lawyer to investigate details about the benefits of getting coverage.

Vic Cotton, Canwest News Service
National Post
Published: June 20, 2009