Title insurance is integral to real estate buying in order to protect yourself. So what is it?
A title search is used to find out if there’s anything of importance the buyer needs to be aware of regarding the property. These things include (but are not limited to):
- Liens that need to be paid off once the deal is closed (mortgages, back taxes, mechanic’s liens, etc.)
- Restrictions and allowances (real covenants, easements etc.)
- Any recorded legal rights. For example if a neighbour had been given permission to park in the driveway, or if the city owns parts of the property (hydro wires, water pipes, etc.)
These searches are often outsourced to a title company or attorney, due to the fact that this type of inspection can be quite exhaustive.
Title insurance is there to protect the buyer from any problems with title that could arise after the sale. As in-depth as those title searches can be, the reality is that sometimes, things get missed. Insurance will ensure you against any financial losses from deficiencies in the title or property and any unknown mortgage liens.
In order to obtain title insurance, the insurer will go through the records to document a chain of title and detect any claims that are on record. If anything is found, the insurer then works to remedy these before providing a policy.
Title insurance, which ranges in price from $500 – $1500 depending on the value of the property, is a necessary investment to protect you when purchasing a new home.
