Many people enter into property transactions with minimal money. Prepared for the obvious amounts, buyers set aside just enough for a down payment, legal fees and the registration costs.
Unfortunately, there are many valuable products and services that are widely unknown and, therefore, not budgeted for.
Most of my clients have never heard of title insurance until we review their mortgage commitment. This product is a popular option to satisfy common loan requirements.
A policy may eliminate the need for a new survey of your property. However, its popularity stems from the price as opposed to the benefits of the coverage.
Unless a lender specifically demands the insurance, or a policy is identified as a cheap alternative to a lender’s survey requirements, title insurance is commonly overlooked. Title insurance protects property owners, and their lenders, against losses stemming from property title or ownership. Unlike most policies that require an ongoing premium for a potential future loss, title insurance provides protection for a one-time fee.
The premium is typically paid on the closing date. The policy insures against unknown title defects, existing liens, encroachment issues, fraud and errors in public records. It also covers issues related to zoning requirements, building permits and even mistakes made by your lawyer.
The cost of title insurance is usually less than $300. Considering the one-time premium, with no deductible, and the extensive coverage for multiple matters, title insurance is a beneficial product for any homeowner.
However, most people approach the issue from the perspective of a borrower, looking only for the bear minimum to satisfy their lender. Don’t wait for your mortgage company to demand a product like title insurance before you consider it.
Think like a purchaser, not a borrower — make decisions that benefit you as opposed to decisions that are required to protect your lender.
– Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. You can write to Elias at askelias@yahoo.com
