The cheapest way to protect your house is with title insurance
Buying a home is the largest purchase many Canadians will make in their lifetime, so it’s understandable that two recent stories where properties were listed for sale – and in one case, sold – without the homeowners’ knowledge have raised alarm bells.
However, homeowners who are concerned about becoming victims to fraud can find a simple and inexpensive solution: title insurance.
Daniel La Gamba is a real estate lawyer who is also a partner at LD Law LLP. He said that title insurance gives him peace of mind. Yahoo Finance Canada via email.
A one-time premium is paid at the time you purchase your home. Title insurance protects your legal title or ownership and can cover many losses that may arise from previously unknown problems. It is valid for as long you own the property.
A quick calculation shows that the title premium for a one million dollar home would cost approximately $900 according to La Gamba.
Unpaid property taxes and outstanding contractor fees arising from renovations that were done under the previous owner are the most common losses that insurance can cover. Title insurance can also cover fraud, which is an issue that has been more widely covered in recent weeks.
Toronto police revealed they’re investigating two cases where homes were listed for sale Without the knowledge of their owners, and in one case, the home was sold. Both cases are believed to be related.
Two suspects, who used false identification and hired realtors in order to list the homes, were arrested by police in both cases.
La Gamba states that the deal in which the home was sold and the new owners took over the property is unlikely to be reversed, leaving the original owner in the dust.
“It is possible to apply a legal principle here. This is the Bonafide Buyer for Value without Notification. He stated that if you have a buyer of good faith who has paid the stated price, without knowing about any claims, their purchase is protected by law.”
“In our case, the person(s), who purchased the property from the fraudsters, would be protected as long as they bought the property in good faith, for fair market value, and without any notice that the true owners never consented.
La Gamba claims that title insurance, if they have it, would likely pay a payout equal the amount of the loss. This is a far greater benefit than the premium cost for insurance.
La Gamba suggests homeowners who do not currently have title insurance, but still want to be protected, purchase a limited policy that focuses on fraud.
Michelle Zadikian, a senior reporter at Yahoo Finance Canada, is Michelle Zadikian. Follow her on Twitter @m_zadikian.
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