Assuring Good Title
Buying a home is the biggest purchase most of us will make. With so much money on the line, the last thing you need, is to find out some unknown person has a claim on your home or to have a problem that will make it difficult for you to refinance or sell. One of your lawyer’s major responsibilities is to make sure you get good title to your
property.
What is a Good Title?
Good Title means that the house or property you have purchased is really yours and that no one else has a claim to it that you do not know about. Good Title also makes sure that your property is correctly described in all official documents and that those documents are properly registered.
What is a Letter of Opinion?
Traditionally a lawyer assures a buyer of Good Title with his/her opinion on title. A lawyer provides his client with a Letter of Opinion, which sets out whether the buyer has a good and marketable title to the property. This opinion is arrived at following a number of searches and inquiries.
What if something goes wrong after closing?
If problems creep up after closing and the buyer can prove the lawyer did not do everything legally necessary, then the buyer can sue the lawyer for any losses he/she suffers. Lawyers in Ontario are required to carry errors and omissions insurance.
What is Title Insurance?
Over the last few years, Title Insurance has been gaining popularity in Ontario. It offers home buyers another way of guaranteeing Good Title. If there are any problems after closing, the buyer will be covered for losses up to the amount of the policy. The amount of the policy is generally equal to the purchase price of the home. The policy is usually in effect until the owner or his/her heirs no longer own the property.
What are the advantages of buying Title Insurance?
– The cost of the policy may be less than the cost of rectifying a particular problem.
– It may save having to get a new survey.
– There may be fewer disbursements to pay since fewer searches are required.
– If something goes wrong the buyer should be able to recover his/her losses more quickly.
– Since this is “no fault” insurance, the buyer does not have to prove the lawyer was negligent.
– The buyer is protected against mistakes by a third party, such as a municipality giving incorrect information.
What are the disadvantages of buying Title Insurance?
– The cost of the policy may just be an added expense that is not necessary in your situation.
– Like any insurance policy it has both exceptions and exclusions with its coverage (be sure to review them carefully).
– Some policies cover the lender but not the buyer.
– You may be able to bypass the need for a survey however, it does not change the fact that certain problems may exist e.g. your neighbour’s fence is on your property or it is smaller than you were told.
How much is the premium?
Depending on which company you buy from and the purchase price of the house, the cost of the premium is approximately $150 for a condominium and $250 for a single family home plus PST.
What if something goes wrong after closing?
As long as the problem is covered under the insurance policy, the buyer makes a claim directly to the insurance company. There is no need to hire another lawyer or to prove negligence.
Do I still need a lawyer to do my real estate transaction?
Yes. Your lawyer will
– review your agreement of purchase and sale;
– prepare your deed, mortgage and affidavit of residence;
– explain your options for assuring you have Good Title;
– help you decide if Title Insurance is necessary;
– help you choose an insurance company;
– purchase the insurance policy on your behalf; and
– review and explain the policy to you.
Moreover, in order for the insurance policy to issue, your lawyer will have to search the title and report on it to the title insurer.
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