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What is Title Insurance?

Today, almost every single transaction is title insured whether it is a routine condominium transaction or a complicated commercial transaction.

Before title insurance, lawyers had to do all there on title searches at the land registry offices and their off-title searches to various government compliance authorities such as zoning, building, environmental, fire, utilities, tax, etc.  All these searches are costly and could take weeks to obtain.  Title insurance replaces off-title searches by compensating the Purchaser if there are any undisclosed off title issues.  Moreover, title insurance will compensate the Purchaser for any on title issues not disclosed by a land titles parcel abstract available electronically through the land registry offices.

With title insurance, a lawyer does not need to give an opinion on title, meaning that he or she is not guaranteeing title.  Title insurance can also cover or insure over known title defects in order to help facilitate the transaction should the defect threaten to cloud title.  Moreover, title insurance can be obtained in lieu of a survey.  Most Seller’s do not have up-to-date surveys, therefore if there are encroachment issues that the Buyer was not aware of due to the unavailability of an up-to-date survey, the title insurer will compensate the Buyer.

Title insurance also protects against real estate and mortgage fraud which can occur with the use of fake identification when fraudsters purport to be the home owners, dupe lawyers, and proceed to sell or mortgage the property without the real owner’s knowledge.

While title insurance is at the option of the purchaser, it is a great product that protects the title holder and typically the lender for as long as the property owner owns the property without having to pay any fees except a one time fee on closing.  There are different title insurance policies and title insurance companies.  On your next transaction, speak to your lawyer about the different available policies and the pro’s and cons of obtaining title insurance.

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Related Page: Articles by Maxim Zavet
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About the Author

Maxim Zavet is a real estate lawyer in the city of Toronto. His practice is primarily focused in various residential and commercial real estate transactions for individuals, corporations and developers. Maxim had worked at some of Toronto's premier real estate law firms before becoming a founder and partner at PLZ Law.