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, a real-estate lawyer and partner at LD Law LLP stated that title insurance provides peace of mind. Yahoo Finance Canada via email.
The title insurance policy is a one-time premium that you pay at the time you buy your home. It protects the legal title and ownership of the property, and can also cover losses due to previously unresolved issues. It will be in effect for as long as the property is yours.
According to La Gamba, a quick calculation showed that the title insurance premium for a home worth one million dollars would be approximately $900.
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 the owners and in one case, the home was sold. These two cases are believed to be connected.
Police say that two suspects used fake identification to impersonate homeowners and hired realtors for the listing.
La Gamba stated that it was impossible to reverse the sale of the house and that new owners have taken possession. This leaves the original owner without a home.
“There is a legal principle that is applicable 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.”
“Assuming our scenario, the person(s) who purchased this property from fraudsters would have protection so long as they bought it in good faith, at fair-market value, and without being informed that the real 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 recommends that homeowners who do not currently have title insurance purchase a policy that covers only fraud.
Michelle Zadikian works as a senior reporter for Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
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