Your home’s title is a legal document essential to any real estate purchase. It contains vital information such as the registered owner of the property, the type of land ownership, and any encumbrances or liens.
With guidance from property lawyers in Edmonton, you can better understand the role of your title document and why title insurance is essential for protecting a real estate transaction.
What is outlined in a title document?
Even before a property is built, a title document is registered for the land. This document is updated whenever something significant occurs, such as a transfer of ownership. If you secure a mortgage to buy the property, your lender will place a lien on the home to guarantee repayment if it is sold.
Titles often include details pertaining to easements on the property, and for newly constructed homes, there may be some architectural restrictions in place to safeguard the community.
For further details about what may be included in your title, consult with a real estate lawyer.
Why is title insurance necessary?
If there are defects in the title, paperwork errors, easement issues, zoning problems, or other potential losses, title insurance protects both you and any lienholders on the property. Without it, you could face significant out-of-pocket costs in the future if an issue arises.
This type of insurance is usually dealt with when you buy a new home and are paying the legal closing costs and is a one-off payment of around $275. Provided you continue to own the property, no renewal is ever necessary.
Although not mandatory in Alberta, mortgage lenders may request that you hold a policy in order for their interests to be protected.
What’s covered by title insurance?
You could be responsible for paying the fees associated with any one of the problems listed below if you don’t have title insurance:
- Property ownership problems
- Unpaid taxes or other fees against the property
- Errors made during assessment of the property, like surveys and boundaries
- Any problems that could have a negative impact on the future sale of the property
How will you receive your title document?
When working with a real estate lawyer to close the purchase of your new home, you’ll need to wait while certain paperwork submitted to the Land Titles office is fully processed before receiving your title in the mail. Note that the process can take any number of months.
If your home was bought from a builder, all paperwork pertaining to the title of the property and relevant insurance will be taken care of for you and is applicable from the date that you officially bought the property.
What happens if you need to make a claim?
Although title insurance claims are rare, the risk is always there, and if you need to make a claim against your policy, you’ll need to follow the procedures as outlined by your insurance policy holder. You can also work with an Edmonton real estate lawyer if you need further assistance with issues your insurers aren’t able to help you with.
Title insurance is by no means mandatory for citizens of Alberta (although mortgage lenders may require you to hold a policy), but it’s always worth investing in when you buy a property, if only for peace of mind. Additionally, title insurance costs less than a Real Property Report, or RPR, doesn’t require a home visit like an RPR, and never needs to be updated for as long as you own the property.
