MacKay & McLean Share Why Title Insurance is Very Important
In our latest real estate law tip the topic is title insurance. Approximately 8.5 million Canadians own their own homes. Owning your own home is a symbol of financial security. However, that security, that asset, is increasingly at risk (for example, see Saskatchewan Accused of Posting Fraudulent Ad on Kijiji (Sept 19, 2011)).
Title fraud is approximately a C$1.5 billion dollar a year industry and growing. This has given rise to new products being made available to you to help protect yourself. One such product is title insurance.
Initially, title insurance was used in Saskatchewan only when a surveyor’s certificate was not available. This is because it insures against any defects that would have been revealed if a surveyor’s certificate or real property report had been obtained. People opted for it because it cost less than a new survey. However, title insurance protects you against much more and it is especially good for people buying used residential real estate, rental properties or commercial real estate.
Like other insurance products, you pay a premium to the insurer. Usually, this is a one time fee. Different insurers structure their pricing differently and there are policies for owners and policies for lenders, so rates vary. The premiums for condominiums are usually less. The fees for commercial transactions are typically greater.
For the one time premium you get protection for as long as you own the property and it protects your estate in the event of death. The amount of protection is up to twice the fair market value of your property, at the time the insurance was obtained.
Lawyers will usually charge an administration fee of $75 to $150 to provide the appropriate data and information to the insurer.Typically, it is obtained through your lawyer’s office when you buy a property. “Existing Home Owner’s” insurance is also available at any time. Some insurers in Saskatchewan, like Co-Operator’s, are now providing the product.
It is important to remember that lawyers do not receive any compensation from the insurance companies for recommending or assisting you with obtaining title insurance, i.e. we are not sales people for the title insurers and we do not receive trailer fees or commissions from the insurers.
In fact, a lawyer’s failure to discuss it with you may constitute professional negligence and that lawyer may be liable to you if you suffer damages from something that the insurance would have protected you against. In other provinces, for example, Ontario, lawyers are obligated by their professional code of conduct to thoroughly discuss title insurance with you.
I recommend title insurance because I believe that most times it is in your best interests to have it. At the very least, you should have the opportunity to make an informed decision.
The four main specialist insurance companies in Canada are: (1) First Canadian Title Insurance, (2) Stewart Title Guarantee Company, (3) Title Plus, and (4) Chicago Title Insurance Company. For more information on title insurance, its cost and benefits, visit the following websites: First Canadian Title; Stewart Title Guarantee Company; Title Plus; and, Chicago Title.
Some things are better to have and not need, than need and not have. Title insurance is one those things.
*Always check with the insurer to see what they cover and what they do not. Make an informed decision.