What is Title Insurance?
Title insurance is an optional insurance policy that protects you (as the home owner) against challenges to the ownership of your home or from problems related to the title of your home. The policy provides coverage against financial losses due to title defects and/or defects existing before you purchased your home. A title defect can prevent clear ownership of a property. There are many types of defects: unpaid liens, fraud, forgery, encroachments, easements, zoning non-compliance, errors in surveys or public records or even someone other than the home owner having interest in the property. Most lawyers regard title insurance as a critical component of the transaction and will usually not close a purchase without it.
Title insurance policies do not provide protection against previous title defects known prior to closing, environmental hazards and soil contamination, native land claims, problems discovered by a new survey or inspection, matters not listed in public records (unrecorded liens), zoning bylaw violations by the policy owner, certain government rights in land.
Title insurance is generally a one-time premium payment, usually purchased when you buy your home or when you refinance it. However, it can be purchased any time after you buy your home. Coverage lasts the entire period of ownership of the property. Most companies extend this coverage to people who inherit property, to a spouse in the event of a divorce and children if the property was gifted to them.