Title Insurance to the Rescue!
After months of intensive house hunting with your real estate broker, you are finally about to buy your new home. However, when visiting the notary to conclude the transaction, the notary tells you that the property you’re buying has title problems. What should you do?
It is in response to problems like this that title insurance was created. It is actually a type of damage insurance, under which the insurer will intervene if the insured suffers damages due to irregular titles.
Here are some of the elements covered by title insurance:
- arrears of municipal and school taxes;
- encroachment on a servitude or a neighbouring lot;
- non-compliance with municipal bylaws;
- surveying errors;
- absence of a certificate of location.
A concrete example
To better understand how title insurance works, let’s use a concrete example: you discover at the notary’s office that the inground pool in the back yard encroaches on a Hydro-Québec servitude. Hydro-Québec therefore has the right to require that the pool be removed or moved. Rather than cancel the sale immediately, you can take out title insurance. Thus, if Hydro-Québec were to make such a request, the insurer would pay the cost of moving the pool.
It’s important to understand that title insurance does not resolve problems with a property’s title. Its role is to insure owners against damages resulting from non-compliant titles on their home that could arise in the future.
Title insurance is a premium you pay only once. For an average single-family home, the cost is about $300. Although title insurance is usually purchased when buying or refinancing a house, it can be obtained at any time after buying a home.
Do not hesitate to consult a notary who can properly advise you on the relevance of title insurance.