What is Title Insurance

When you enter into an Agreement of Purchase and Sale to purchase a property, you will retain the services of a lawyer to handle the paper work on your behalf. The lawyer will review the Agreement of Purchase and Sale and, in order to ensure that you are obtaining good, clear and marketable title to the property (that you will own the property without any prior encumbrances, liens, work orders, debts, etc. from a prior owner), he or she will perform a number of searches on your behalf. These searches could include:

1. title search;

2. corporate status search;

3. execution search;

4. compliance with subdivision agreements;

5. tax arrears search;

6. unregistered hydro easement search;

7. building work order search;

8. zoning compliance search;

9. water well record search;

10. septic use permit search;

11. conservation authority search;

12. status of restrictive covenants;

13. gas arrears search;

14. hydro arrears search;

15. water arrears search; and/or

16. fire work order search.

You, as the purchaser, have the choice of either:

a. relying on your lawyer's title opinion of the property; or

b. obtaining a title insurance policy.

There are a number of companies that offer title insurance policies. Your lawyer will advise you of your options and what items each policy covers. If you choose to rely on your lawyer's title opinion of the property and, after closing, a problem with the title arises, your lawyer must correct it. If the lawyer cannot correct the problem, you can sue the lawyer for negligence and the lawyer may make a claim under his or her law firm's mandatory insurance for errors and omissions. If, on the other hand, you choose to obtain a title insurance policy and a problem arises after closing, the title insurance company will correct the problem.

If you choose to obtain a title insurance policy, your lawyer may not have to perform some of the usual above-noted searches, as the policy assumes the risk for problems that would be uncovered through the search process. Not having to send some of the required search letters may save you some disbursement costs, as most of these searches require a fee to be paid before the information will be released. Although the title insurance policy does have a cost associated with it, it may offset the costs you will save by not having to pay some of the above-noted searches.

No matter which policy you choose, if you choose that route, the following searches will not have to be done by your lawyer (the title insurer will assume the risk for problems that would have been found during these searches):

1. compliance with subdivision agreements;

2. corporate status search; and

3. execution search against previous owners.

Depending on the policy you choose, some of the following may not have to be completed by your lawyer:

1. tax arrears search;

2. status of restrictive covenants;

3. unregistered hydro easement search;

4. water arrears search;

5. hydro arrears search;

6. gas arrears search;

7. building work order search;

8. conservation authority search; and

9. zoning compliance search.

Some of these searches, however may still have to be completed. Be sure to speak with your lawyer about the best option for you depending on the property you are purchasing.

Barb Asselin is a college professor, author and owner of Asselin Group, an online publishing company. For more articles relating to real estate, visit http://ontarioprooperty.asselingroup.com

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