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Tag: title insurance

  • Five most common title transfer issues

    Five most common title transfer issues

    A title is a legal term that means registered owner of a property.  A title transfer is assigning ownership, or part of the ownership to another party.

    When purchasing a property, the title must be transferred from the seller to the new owner. However, it is not always as simple as signing a document, a large number of properties may require work to "clean up" issues with a title.

    Here is a list of the five most common issues:

    Property has a Lien

    If any of the previous title holders had outstanding debt, such as unpaid property taxes, general contractor bills, or a judgement from the court to pay off a creditor, those companies may have placed a lien on the property. 

    A property lien is a legal claim on assets that allows the holder to obtain rights to the property if debts are not paid. If there is a lien on the property you are purchasing, you may inherited it upon closing. 

    This is an example of a very common issue that can be resolved by your lawyer on closing. Using a title search will identify if there is a lien on the property and you can work with your lawyer to address and resolve the issue. 

    Boundary Disputes

    If you will not be getting a survey on your potential property before closing from the sellers you run the risk of having a boundary dispute with neighbouring properties. A boundary dispute is somewhat common and the only way to resolve this issue is through an up-to-date survey on the property. 

    Your Real Estate lawyer may recommend a property survey if there is evidence to suggest it would be beneficial. However, this is quite often not the case, few closings include property surveys because of the cost and length of time it takes to complete. Without taking proper protection, this potential issue could be a serious financial burden to resolve.

    This is a case where title insurance is a great option to mitigate some of the unknowns and protect future interests in the property.

    Illegal Past Deeds and Fraud

    There are a number of illegal actions that may impact the sale of a property and the transfer of a title in the future. That could include deeds made by minors, people lying about their marital status, an undocumented immigrant. Illegal past deeds such as this may pose an issue to the transfer of a title and cost significant amounts to rectify.

    In addition to the above illegal actions, fraud is another potential issue that may impact title transfers but is much more difficult to identify. When a lawyer conducts a title search you can identify anything that can be searchable through public documents and registrations. However, fraud is often undetectable through these available documents making it one of the most difficult of these common issues to protect against. 

    Undiscovered Encumbrances

    When you purchased the property, you may not have been aware that a third-party may hold claim to part or all of the property from a previous event such as a lien. This may limit what you as the owner will be able to do with the property. These limits are known as encumbrances and are placed on the property itself, not the owner. 

    A real estate lawyer for title transfer will help discover if the property in question has unknown encumbrances. Some encumbrances are welcomed by owners, such as zoning laws that restrict properties in an area from being used for commercial purposes. Others can be more troublesome, like liens placed on a property that seek repayment of debt. 

    Almost all property, particularly in densely populated areas, is encumbered in one way or another. That is why it is important to have a knowledgeable real estate lawyer by you side when learning if there are encumbrances on a property

    Public Record Errors

    Whether it be adding an extra zero or misfiling a document, public record errors do happen. Unfortunately, when filing and clerical errors occur, they are often difficult to detect or notice because sometimes they blend in easily. Dealing with public record errors can cause serious financial stress on the title owner and be very time consuming to rectify. 

    How Can I Protect Myself?

    Throughout this article we’ve listed all issues that may arise from a title transfer and likely caused you lots of anxiety. You're probably wondering now, what can I do to protect myself from all these problems. The answer is simple, get title insurance

    While every policy is different and we recommend checking your specific policy for the details, but in general, title insurance will cover you for all of the above title-related issues and more that can affect your ability to sell, mortgage, or lease your property in the future, or its value.

    Final Thoughts

    When conducting a title transfer on a property it’s wise to use an experienced real estate lawyer that can help you ensure you have proper protection and don’t ignore any serious issues. If you have any further questions, rest assured that the Deeded team is here to support you in any way we can.

    Send us an email and we would be happy to answer any questions you have or provide recommendations for your situation.

    Important Note: This article is not Legal Advice.  No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice.

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  • Insurance: Everything You Need To Know When Closing

    Insurance: Everything You Need To Know When Closing

    Whether you’re closing on a home or refinancing your mortgage, you are going to need to look into various insurance products.  Some of these are going to be mandatory, others are optional, and some are just common sense to have or look into.

    Here are the various types of insurance products you will encounter when closing your home or mortgage transaction:

    Home Insurance

    A home insurance policy covers your home and its contents in various situations such as floods, fires, break-ins and personal liability if someone gets hurt on your property.

    If your property has a mortgage, your lender will likely require that you have the appropriate coverage and that you submit proof of your coverage prior to closing your transaction.

    While home insurance costs can add up, there’s really no good reason to leave your biggest asset unprotected.

    When shopping for home insurance, you can use a broker who would typically shop around for the best rates with the insurers they work with, or you can obtain a policy directly from an insurance company.

    Be sure to read the fine print before you purchase a policy as they are not all the same and coverages of certain items and situations can vary among insurers.  Your mortgage lender may also have requirements for minimum coverage levels which you’ll need to consider when shopping around for a policy.

    Costs vary depending on coverage, home value and additional factors

    Condo Insurance

    Your condo corporation will typically carry a commercial policy to cover common areas and the shared exterior and interior aspects of the condo. In most cases, this policy does not cover your individual unit and your contents. You’ll need a personal condo policy to protect your unit.

    For example, if a homeowner in a unit above you has a flood and the water causes damage to your unit and belongings, the home insurance policy of both parties will likely cover the claim.

    Like home insurance, most mortgage lenders will consider having a policy for your unit as mandatory and you will require to produce proof of coverage prior to closing (often referred to as an “insurance binder”).

    The cost of condo unit insurance varies depending on coverage, condo value and additional factors

    Renter's or Tenant's Insurance

    If you plan to rent your property or rent part of it, your tenant’s contents and liabilities may not be covered, even if you have a homeowner’s policy in place on the property.  

    For example, if your property is tenanted and there’s a flood, your home insurance may cover the cost of repairing your property, but if your tenant’s possessions such as their TV or couch suffers damages as a result, your insurance company will likely not cover these items.

    While tenant insurance is not mandatory in Ontario, as a landlord, it is a good idea to require your tenants to obtain their own insurance to cover their possessions and personal liability while living in your unit.  Landlords typically incorporate such requirements as part of the lease agreement.

    The cost of tenants insurance may vary with the level of coverage needed, but in most cases, it is an affordable monthly payment.  

    Title Insurance

    Your property’s title is legal proof that you are its owner. It describes your rights to the land and any limitations like giving your local phone and power companies legal right to construct, repair, replace and operate wires on a section of your property.

    Title insurance is a policy that protects the homeowner and lender against future issues that may arise with the title of the property.

    For example, you purchased a property with a shed that was built by the previous owners. It is later discovered that the shed partially sits on the neighbour’s property.  In this case, a claim can be made to correct the situation.

    Title insurance also protects against existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property), title fraud, and errors in surveys and public records.

    Most lenders will require you to obtain a policy to insure your title as the policy also protects the lender’s interests in having a marketable property.  Learn more about title insurance here.

    Unlike usual insurance premiums that are paid monthly or annually, Title insurance is a one-time premium based on the value and location of the property.

    Mortgage Default Insurance

    Mortgage default insurance (also known as “mortgage insurance”) is mandatory on all mortgages with a down payment of less than 20 percent of a home’s purchase price.

    This insurance protects lenders, but also allows qualifying buyers purchase a property with as little as 5% down payment.   

    Mortgage default policies typically costs between 2.8% to 4% of the mortgage amount. This cost can be rolled onto the mortgage so it’s not an out-of-pocket expense.

    Life, Disability and Critical Illness Insurance

    While it is difficult to imagine, when taking on a mortgage, it is a good time to consider unfortunate scenarios whereas you may not be able to pay your lender and may put your home at the risk of foreclosure.

    While life or disability insurance may not have been a topic you thought about in the past, it may be worthwhile considering a policy to protect you and your family in a worst-case scenario. 

    Life insurance is not mandatory, but a good idea to look into.  Disability and critical illness policies are also options that would supplement your income should you not be able to work due to a disability or a critical illness.  These products are also typically offered through your employer’s benefit plans.

    Costs can vary depending on type, coverage, and personal factors. 

    Home Systems Warranty

    You moved into your new home in the summer.  Come fall, you turn on the furnace and discover it isn’t working.  You’re devastated when find out that you need a new furnace at a cost of $4500.  

    In reality, the systems in your home are complex and can be expensive to repair or replace.  There are several options that will cover major home systems and even appliances should they break down or require repair. 

    While absolutely optional, if you are looking to reduce the risk of expensive repair bills during the course of your home ownership.  There are various options that will have you covered and sleeping well at night.

    Costs vary depending on the coverage you are looking to get and the home’s age.

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  • Title Search – What is it and Why Do You Need It.

    Title Search – What is it and Why Do You Need It.

    Before we explain what a title search is, it is important to understand what title means.

    Title is a legal term that means registered owner of a property

    Records associated with the title of a particular property are usually kept in a land registry office, which is responsible for record keeping.  These records include deeds, court records, property and name indexes, and other documents related to the property.

    Before you purchase a property, your lawyer conducts a title search to examine the property’s title history and ensure that the seller has the legal right to sell the property, and that there are no other encumbrances (such as liens, title claims, judgements, mortgages etc.) or property line issues that could prevent the buyer from taking full possession.

    What Does a Title Search Show?

    A title search clarifies the legal owner(s) of the property, any existing easements, leases, or restrictions that affect the property, any mortgages, judgements against the property, liens, or unpaid rental contracts (such as hot water tanks) that will need to be dealt with before the property can be sold to a buyer.

    What if There Are Issues Found With The Title?

    If title issues arise with the property you are purchasing, your lawyer will work with your seller’s lawyer to try to resolve.  Often times, issues can be corrected prior to closing

    What if There Are Issues Found With The Title?

    If title issues arise with the property you are purchasing, your lawyer will work with your seller’s lawyer to try to resolve.  Often times, issues can be corrected prior to closing.

    What If a Title Issue is Discovered After Closing?

    In case an issue is discovered on your title after you have closed your transaction, title insurance covers several situations and is meant to protect you against the unforeseen. For more information on title insurance, click here.

    How Much Does a Title Search Cost?

    Our transparent fees include a title search for purchases and refinances of properties.  Depending on the extent of the searches required, you may incur some disbursements for service fees incurred for the searching the land registry.

    I’m Refinancing, Why Do I Need a Title Search?

    Your lender will likely require a new title search as a condition of refinancing.  Lenders typically will need to see if there are any issues standing in the way of your property being fit to sell when approving refinancing transactions.  

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