Did you know legal and financial problems with your home purchase can surface long after you've closed the deal? Mortgage lenders know this and that's why they take steps to protect their financial interest in your property. My job, as your real estate lawyer, is to make sure your interests are protected, too.
In order to address its concerns, your lender will require one of the following:
- * A solicitor's opinion letter certifying good and marketable title on the property OR
- * A title insurance policy.
Without one of the above, your lender will NOT release the funds for your mortgage.
When you review the following information, it's obvious why most people opt for title insurance:
Option #1 - Solicitor's Opinion Letter:
Total Cost: $2,200 to $3,100
Option # 2 - Title Insurance:
Total Cost (already included): $432 (for homes worth up to $500,000)
As you can see, title insurance is the cheaper option but the benefits do not stop there. Title insurance also goes beyond the traditional lawyer's opinion, adding another level of protection that shields you AFTER the sale of the home, for the entire time you own the home, from problems you might never have imagined. Here are some of the most common examples:
Example 1 - Unbeknownst to you, the owner of the property you are about to buy has renovations done just before selling but doesn't pay off the trades people. At the time of closing, we (your legal counsel) verify that there are no financial constraints on the property. However, under the Construction Lien Act, trades people can put a lien on the property up to 45 days after the work was done. If they do this AFTER the sale of the home it will be too late for your lawyer to detect the problem. As the new owner, you are liable for these bills.
Example 2 - Years after you've settled into your new home, someone steals your identity and takes out a fraudulent mortgage against the property. Under the law, the bank or lender is considered to be an innocent party and can require you, the homeowner, to repay the lender for the second mortgage.
Example 3 - Although there may appear to be no unpaid taxes against a property at the time of sale and title search, there have been cases where the municipality later claimed there were, and, as unfair as it may seem, successfully went after the new owner for payment of the taxes.
The good news is: title insurance protects you against all of these scenarios and more. For a longer list of the benefits of title insurance, please click here.
Of course, like all insurance products, title insurance will not protect you from defects of which you were aware prior to closing (such as those disclosed by a home inspector or the seller) or to which you may have agreed in your Agreement of Purchase and Sale. As well, all policies are subject to exclusions and exceptions, such as, but not necessarily limited to environmental matters and native land claims.
In summary, there are two ways to satisfy your lender's concerns (solicitor's letter or title insurance) but only one way to provide you with long-term peace of mind - and that is title insurance. That's why I highly recommend title insurance and it is included in the cost of the package under which you originally retained me. If you feel that your property warrants an opinion letter instead of title insurance, please call me immediately (519-824-7100) so that we may discuss this matter further.
Mark F. Graham
Mark F. Graham
Barrister, Solicitor, Public Notary
Mark Graham Law Office Professional Corporation