Having title to a property should mean you own it and it is yours, although there may be a lien over it in respect of a mortgage you took. Most Canadians believe their title is rock solid because they registered it with the government. However things are seldom as simple as they look and the title could be invalid. For this reason, some buyers protect their rights with title insurance.
Title insurance covers them in the event the title they thought they purchased either does not exist, or has pre-existing rights over it. They could lose their entire investment in their purchase otherwise, although they may be able to lodge a claim against someone involved in the process.
Where Having Title Insurance May Have Value
Title insurance indemnifies the beneficiary against financial loss from defects in title to real property (and from the invalidity or unenforceability of mortgage loans in the case of lenders). Here are some examples we have come across where a purchaser is temporarily, or permanently unable to enforce their right of ownership:
# There is an error in the title documents. Property details or the parties to the sale may be incorrect
# The purchaser’s lawyer provided incorrect information to a title registry, that failed to notice this error
# There may be open liens over the property in terms of guarantees, loans, taxes, or utility / strata levies
# The purchaser may the victim of deliberate fraud through misrepresentation of relevant information
# A fence or building etc. on the property may encroach a boundary with a neighbour who wants redress
# Too much time elapsed between the date the parties agreed the transaction and the registry application
Title Insurance in Practice: What It Covers
Title Insurance is commonest in the United States by far. Although American state recorders of deeds do not guarantee real estate owners’ rights cannot be lost, annulled, or overturned. US title insurance pays the costs of defending a lawsuit challenging the title. Alternatively, it will reimburse the insured for the actual monetary loss incurred up to the dollar amount of insurance provided by the policy.
Insurers also issue title policies in Canada, Australia, the United Kingdom, Mexico, New Zealand, Japan, China, Korea, and throughout Europe. However most of their business is with off-shore investors living in the States. Whether or not you need title insurance in Calgary depends on the circumstances. Transacting with a reliable company is part of the process of ensuring the real estate you wish to purchase is genuinely for sale.