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Insurance; there are so many kinds. All are suggestions from large institutions warning that you should buy insurance just in case the worst happens. Like any type of insurance, you can probably assume that Title Insurance is important, but do you really need it?

The bare bones: When you buy a home, your real estate lawyer ensures the title to a property was properly registered with the government’s land registration system. This checks that the property is free from unknown claims or liens.

Unfortunately, there are schemers out there who commit real estate fraud. Common fraud techniques include forgery and identity theft. In the first scenario, the fraudulent person registers forged documents to sell a property, registers a forged discharge of the existing mortgage, gets a new mortgage against the property’s clear title, then steals the money.  Identity theft occurs when the fraudster uses stolen identification or documents to impersonate the homeowner and obtains a mortgage on a victim’s property.

Anyone can be a victim of real estate fraud. The easiest targets are new homeowners with no existing mortgage, however even a property owner with a current mortgage can be taken advantage of. Mortgage funds are mistakenly transferred to the fraudulent third party and are rarely recovered. If you become a victim of real estate fraud, huge amounts of time and effort is spent in trying to retrieve your lost funds. Another negative? The banks don’t halt your payments. It’s your job as the homeowner to prove that your title has been compromised.

The solution? Title Insurance.

Title insurance will cover the unforeseen legal costs of potential real estate fraud. It can be purchased when you buy your home or any time thereafter. It can also cover unanticipated risks like structures completed without permits, encroachment, liens, and zoning and by-law violations.

So, like any type of insurance, it would be awful to take the risk of purchasing a home without the peace of mind that Title Insurance provides. Feel free to ask me about the benefit of Title Insurance for your next home.