Understanding Title: What Is It and Why Is It Important?

Title is a legal document that shows who owns a property and any interests or rights that exist with respect to the property. In Ontario, it is important to have a clear title when you purchase a property to ensure that you are the rightful owner and that there are no claims or liens against the property that could affect your ownership or use of the property.

A clear title means that the property is free from any legal issues or disputes, which may arise from past ownership or debts owed. For example, a lien can be placed on a property if the previous owner did not pay their taxes, and this could result in a new owner having to pay off the outstanding debt. It is important to perform a title search to identify any potential issues with the title before purchasing a property.

What are Title Searches and How Do They Work?

A title search is the process of reviewing public records to determine the history of a property’s ownership and any claims or liens against the property. In Ontario, title searches are typically conducted by a lawyer or a title search company, and the information is gathered from the land registry office.

A title search can reveal important information, such as:

• Who currently owns the property
• Any liens or encumbrances on the property
• Any easements or rights-of-way on the property
• Any restrictions on the use of the property

Title searches can take anywhere from a few days to several weeks to complete, depending on the complexity of the property’s history. The cost of a title search is typically included in the closing costs when purchasing a property.

What is Title Insurance and Why Do You Need It?

Title insurance is an insurance policy that protects against any defects or issues with a property’s title. In Ontario, title insurance is typically purchased by the buyer at the time of closing and is a requirement for obtaining a mortgage. Title insurance is different from other types of insurance in that it provides coverage for issues that existed before the policy was purchased. It is a one-time cost that covers the property for as long as the buyer or their heirs own the property.

Title insurance can provide coverage for a variety of issues, including:

• Forgery or fraud in the chain of title
• Unknown liens or encumbrances
• Errors in surveys or public records
• Title defects that prevent the buyer from using the property as intended
• Unresolved property boundary disputes

How to Obtain Title Insurance

Title insurance is typically provided by a title insurance company. The cost of title insurance can vary depending on the purchase price of the property, but it is usually a few hundred dollars. A buyer will need to provide the title insurance company with the necessary information, including the purchase price of the property, the address, and the names of the buyer and seller. The title insurance company will then conduct a title search to identify any issues with the title and provide the buyer with a policy that covers those issues.

How Can Title Insurance Protect My Home Purchase?

There are several common issues that can arise with titles, such as:

• Liens or encumbrances on the property
• Disputes over property boundaries
• Undisclosed easements or rights-of-way
• Fraud or forgery in the chain of title

Title insurance can protect against these and other issues, which can save the buyer a significant amount of money and stress in the long run. For example, if a lien is discovered on the property after the sale, the title insurance company will cover the cost of removing the lien. Title insurance can also help to protect against potential lawsuits from third parties who claim an interest in the property. If such a claim arises, the title insurance company will defend the buyer’s ownership of the property

Real-life Examples of Title Insurance in Action

There are several real-life examples of how title insurance has protected property owners in Ontario.

• In one case, a buyer purchased a property and discovered after the sale that there was an encroachment on the property from a neighboring property. The title insurance company covered the cost of a survey and the legal fees required to resolve the encroachment.
• In another case, a buyer purchased a property and discovered that a portion of the property had been expropriated by the city many years prior. The title insurance company covered the cost of compensating the buyer for the expropriated portion of the property.

In both cases, the buyers were protected by their title insurance policies and were able to resolve the issues without incurring significant expenses.

Conclusion

In Ontario, having a clear title is essential when purchasing a property. A title search is an important step in identifying any potential issues with the title, and title insurance can provide protection against those issues.

With title insurance, property owners can have peace of mind knowing that their investment is protected from unforeseen issues that could arise in the future.

If you are purchasing a property in Ontario, it is important to consult with a real estate lawyer or agent who can guide you through the process of obtaining a clear title and title insurance.