1. What is “Title Insurance”?

Title insurance covers the financial loss due to legal defects in title, but what “types” of loss are covered depends on the policy. Title insurance doesn’t “fix” problems, but provides insurance coverage for them.

2. What are the benefits of obtaining title insurance?

Alberta does not require title insurance as a matter of law, but buying title insurance may be a smart choice. A one-time payment can give you coverage that can last as long as you own the property, and covers losses up to the maximum listed in the policy. For example, title insurance can cover financial losses arising from:

o Fraudulent real estate transactions;

o Internal non-compliance issues that do not show on a Real Property Report (such as a lack of building permits or failure to meet building code on renovations) and may cover hidden structures (such as underground septic tanks);

o Liens that exist on the property, such as mortgages or unpaid property taxes of the previous owner;

o Errors in the land survey documents;

o Other title defects that were unbeknownst to you and have impacted the value or use of your land, or the ability of your heirs to sell the property once it’s part of your estate; and

o Legal fees that arise while defending your title or trying to recover it

3. What are the cons of buying Title Insurance?

Because title insurance policies are not an “all risk” coverage, it is important to understand what title defects your policy covers, and what defects will not be covered. There are several title defects that are not traditionally covered by title insurance:

o Title defects that you had notice of prior to purchasing the property;

o Unregistered liens; and

o Zoning bylaw violations that were created by the holder of the insurance policy

Purchasing title insurance is an important choice, and often a smart one, that can help you protect your property assets long-term. However, you should ensure that you review your policy carefully and thoroughly so that you are not caught off-guard by what the policy does (and does not!) cover.

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