Title insurance, which protects an owner's
right to "title" (otherwise defined as property
ownership), was introduced to Canada in the early 1990s
and is a viable alternative to the conventional way of
purchasing commercial and residential real estate. Peace
of mind and potential cost savings are just a couple of
the unique benefits a title insurance policy offers. There
are unlimited instances in which title insurance facilitates
a speedy hassle-free purchase, sale or refinancing of
commercial or residential properties. Title insurance
companies have the ability to quickly underwrite title
risks and in many cases insure over known defects. This
results in broader coverage for all insured parties.
Lenders in most commercial and residential
transactions insist upon an up-to-date survey or a title
insurance policy. The absence of an up-to-date survey
often results in a delay in the completion of the transaction
and sometimes additional costs. Title insurance offers
full coverage for a lender in lieu of a survey, thus enabling
the transaction to close as scheduled and saving the purchaser
both time and money. When an existing survey reveals encroachments
or other problems, a title insurance company usually can
underwrite the problems and provide full coverage to the
lender. Title insurance companies also endeavor to provide
the purchaser with the broadest coverage possible.
Title insurance works by assuming reasonable
risk in the purchasing process. In the course of conducting
a search of the title of the property being purchased,
the solicitor may uncover a title "defect" or
"cloud". In many instances, the revelation of
this "defect" or "cloud" could potentially
cause a delay in the closing or the complete collapse
of the transaction. Title insurance companies often insure
over these known defects and therefore provide time- and
cost-savings to the purchaser.
There are many advantages to purchasing
a title insurance policy -- for both the purchaser and
lender. To benefit from the policy and save money, it
is best if the lawyer (who orders title insurance on behalf
of his or her clients) commits to a title insurance policy
at the beginning of the transaction. A title insurance
policy eliminates the need for many on and off title searches,
resulting in cost savings for the purchaser as well as
simplifying the process and enabling a quicker closing.
In most instances, title insurance is less expensive than
a survey. A title insurance policy guarantees the state
of title to real property as of the date of closing. It
also protects against losses that result from fraud and
forgery related to title. Title insurance shifts the risk
from the solicitor and the client to the title insurance
company and provides the purchaser and lender with more
comprehensive coverage than that of a solicitor's opinion
on title. When all parties to the transaction are title
insured, title insurance also eliminates the law society
surcharge levy (an amount charged to the client as one
of the closing costs).
It is becoming more and more evident to
purchasers, owners and lenders of commercial property
that the benefits of title insurance make it worthy of
consideration. In the event that a covered problem should
arise, the shift of liability from a solicitor to a title
insurance company allows policy holders to look to title
insurance for satisfaction and provides additional security
in an uncertain world. Title insurance is available right
across Canada.
Paula Michelangeli
is a commercial underwriter for First Canadian Title,
Canada’s leading provider of title insurance and
other real estate related products and services. She can
be reached by telephone at 1 (800) 307-0370.
