Selling a home can be a rollercoaster ride of excitement and frustration, usually ending when an offer is accepted, the legal paperwork done and the seller gets the money from the sale to move to a new home. Unfortunately, frustrations can arise when problems are discovered with a home's title -- such as outstanding work orders no one knew about or questionable property access rights. However, the selling homeowner may already have the solution to these problems – in the form of title insurance.
“Title insurance provides coverage against problems that could affect ownership or the marketability of the property,” said Ray Leclair, vice president of public affairs at LAWPRO. “It's a one-time purchase, made through your real estate lawyer, that protects your legal ownership of the property for as long as you or your heirs own it.”
Leclair recounted a case in which homeowners Betty and Alan decided to sell their home and buy a bigger one elsewhere in the city. They signed the sale agreement, but a week before closing, the purchaser's lawyer discovered through her due diligence searches that the property was in breach of the city's zoning by-law. The house was too close to the property line.
The usual solution is to get a “minor variance” from the city, which requires a hearing before the Committee of Adjustment and waiting out an appeal period, which can take months. Without the variance, they couldn't sell their house; and with only a week before closing, they could not solve the problem in time. What's more, without the funds from the sale, Betty and Alan could not afford their new home, and they would be in breach of that agreement too.
Fortunately, Betty and Alan had purchased title insurance when they bought their home years earlier. So, they filed a claim under their TitlePLUS insurance policy. This situation was covered under their title insurance policy and the insurance company made a legal promise or “undertaking” to address the zoning issue after the closing. The new homebuyers agreed to the terms and the house was sold, averting a more costly, time-consuming and stressful situation.
“The key is to buy the title insurance with the assistance of a qualified real estate lawyer when you buy your home,” says Leclair “and to know what your policy can do for you, so you have options should a problem arise.”
The TitlePLUS Real Simple Real Estate Guide on www.titleplus.ca is a useful resource for homebuyers with information on purchasing a home, title insurance, what real estate lawyers do and how to locate a lawyer near you.