Title insurance protects in the case of claims against the property by the seller's lien holders or family members, as well as errors or frauds in documentation, and the general unmarketability of the property. In exchange for a premium or fee which is paid one time only, the policy of title insurance may provide some element of protection from the possibility of losses arising from:
Unknown defects in the title, including issues which can prevent the buyer from obtaining free and clear ownership of the residential property.
Pre-existing liens active against the title of the property: for example debts incurred by the previous owner for mortgages, utilities, property taxes or even strata charges secured on the value of the home.
Issues pertaining to encroachment, where a structure or use on your property violates the borders with a neighbour and must be rectified.
Errors which may surface in public records or surveys.Why Buy A Home
Various other issues related to the title of the property which can impact the ability to lease, mortgage or even sell the property at any given time.
Wilful fraud in the title.
The possibility that the title has been the subject of wilful fraud is becoming ever more frequent. Real estate title fraud is a form of embezzlement which impacts both home owners and mortgage lenders. Typically it involves a criminal who utilizes identity theft procedures to forge signatures and documents in order to transfer your residential property's legal title to themselves. The identity thief then secures a mortgage based on the equity in your home, takes the money, and disappears.
The title insurance policy will continue to cover you as long as you are the owner of that property, and will generally cover the losses up to the maximum amount stated in the documentation. In many cases it will also cover the majority of legal expenses which are incurred in the restoration of your property's full legal title.