Of Prime Interest: Title insurance protects the equity in your home
Insuring the ownership of your property, referred to as title insurance, is just as important as insuring your property and its contents from physical loss or damage.
Incidents of real estate title fraud are increasing in Canada and homeowners and lenders are proving to be irresistible targets for fraud artists.
But homeowners and lenders can protect themselves by obtaining a title insurance policy.
Legal ownership in property is evidenced by the title to the property being placed into your name. The government land registration records will reflect you as the owner and anyone searching those records will also recognize you as the owner.
You should protect that ownership and therefore, protect one of your most prized assets—your home.
In a typical example of a real estate title fraud, the fraud artist obtains title to a property via a fraudulent transfer document or deed.
He or she goes to a bank and obtains the mortgage funds. The mortgage is then registered against the property.
When no mortgage payments are subsequently made, the lender will serve notice that it intends to sell the property, and the scheme is revealed to the legitimate owner when they receive the notice that the lender is trying to sell their property.
Thieves often target properties that are mortgage free and where owners have a good credit rating. This allows them to apply for a significant mortgage.
Generally, the losses to homeowners can be catastrophic with the homeowners paying thousands of dollars in legal fees to defend their title and lenders often losing the full amount of their mortgage.
Although it’s difficult to pinpoint an exact number, one association suggests that mortgage fraud amounts to $1.5 billion a year across Canada.
Most lending institutions now require title insurance upon registration of your mortgage with the lawyer/notary for either purchasing or refinancing your home.
This requirement is to protect only the lender in the event of real estate fraud. It would be prudent to have a separate policy to protect yourself in the case of any of the above fraudulent acts.
Should you already have a mortgage in place on your home, and not have title insurance to protect yourself, it’s not too late to do so.
All you have to do is contact your lawyer or notary public for assistance and to understand the benefits of title insurance.
The cost is actually inexpensive relative to protecting one of your most valued assets. After all, you insure your life to protect your family so why not insure your home to protect you from losing your financially precious equity.