07 Apr Fraud, flaws and follies ( Title Insurance)
The following excerpt is from a Promotional Feature, even though the information is supplied from one source it has a good explanation as the need for “Title Insurance”
Closing without title insurance is a major risk. Here’s what your clients need to know about this important piece of the mortgage puzzle
WHEN JOHN* received a notice that the mortgage on his investment property was in default and that the lender would be taking possession of the property, he was flabber gasted. He had owned the property for two years and knew that his mortgage was in good standing. Confused about the notice, he sought counsel. An investigation revealed that the title on John’s property was fraudulently transferred, and a new mortgage in the amount of $165,000 had been registered on the title. Mortgage funds were paid to the fraudulent transferee, who was now nowhere to be found.
Luckily for John, he was protected by an FCT title insurance policy. FCT coordinated and retained a lawyer on his behalf, and ultimately paid out $12,548 in legal fees to remove the mortgage from the title and transfer the title back to him. John retained
his investment property while being spared the time, expense and stress of having to defend himself against the fraud.
Not all homeowners are as lucky as John. Homeowners without title insurance who find themselves in a similar situation must engage their own lawyers and deal with the long and costly battle to regain ownership of their property.
As a mortgage professional, you want to help your clients ensure that their investment is secure and viable for years to come.
FCT’s goal is to increase your efficiency and reputation as a trusted advisor while providing your clients with the best protection available. For more than 25 years, FCT has provided title insurance solutions that support simple and secure mortgage trans actions. Your clients may not be equipped to deal with unexpected issues like a clerical mistake with the title registration, a forged document, an incorrect survey or a non existent permit that threatens their property ownership – but we are.
So what is title insurance?
Title insurance is a unique form of insurince. Unlike homeowner’s insurance, which insures the structure and its contents, residential title insurance protects the home owner against actual loss as a result of challenges to the title (i.e. ownership) and other defects relating to the property.
When your client purchases a property, whether a single-family home, condo or cottage, they purchase the title. The registration of the title confirms that they are the rightful owner. Sometimes, however, that ownership might be challenged, or home owners may be exposed to potential losses associated with title fraud, survey and title issues, or even pre-existing defects. Title insurance protects against all of these risks and much more.
What does title insurance cover?
A typical title insurance policy covers common issues (known and unknown) that may have happened both before and after the purchase. This is sometimes referred to as pre- and post-policy because the day the purchaser takes ownership of their home is generally also the effective date of the policy.
THE BENEFITS OF TITLE INSURANCE FROM FCT
More and more homeowners are finding themselves in situations where they have to defend their right of ownership or deal with issues such as fraud and survey defects. Not only are these issues stressful and time-consuming to rectify, but the associated costs can be significant and potentially financially devastating. Comprehensive and cost-effective, title insurance will allow your clients to:
Save time and money by reducing the number of costly searches required to meet most lenders’ requirements. With title insurance, you can complete the deal faster and with lower closing costs for your clients
Close on time, as planned, regardless of known defects. FCT can easily customize coverage that is right for each unique situation.
Feel confident with comprehensive coverage and a no-fault claims process. FCT assumes the risk, responsibility, and cost associated with defending the homeowner’s title, and provides quick and easy resolution in the event of an actual loss for a covered risk.
The most common issues covered under a typical homeowner’s title policy include, but are not limited to, the following**:
• Real estate fraud and forgery
• Survey issues
• Zoning bylaw challenges
Building permit issues
• Property tax arrears
• Known and unknown defects
Title insurance also provides the duty to defend as part of its. coverage. This means that if there is ever a challenge to a matter covered under the policy, the insurer is responsible for paying. all legal costs to defend the homeowner and their title. The cost of that defense does not reduce the amount of insurance under the policy.
How much does a policy cost?
For a low one-time premium, homeowners can purchase the protection they need for as long as they own their home, and the policy can even be transferred to their heirs in some cases. The actual cost of a policy is based on the value of the property and varies by province. You can get a quote in no time at fct.ca/ quote or by calling us at 866-804-3122.
Does every homeowner need title insurance?
Absolutely! Homeowner claims are becoming more and more common, and nothing covers like title insurance. In Ontario, both the owner and the lender are title-insured in approximately 90% of all residential real estate purchase transactions. Most real estate professionals value the role of title insurance within a mortgage transaction. The fonder policy protects the validity, enforceability, and priority of the lender’s mortgage on the title. The homeowner policy protects the homeowner against losses associated with title fraud, survey and title issues/defects, as well as challenges against their ownership. In Ontario, licensed legal professionals must discuss all options to protect a omeowner’s interest in title during a purchase transaction. However, in many other provinces, it is less likely that the homeowner will obtain a title insurance policy – often there is only a lender’s title insurance policy in place. Unfortunately, despite ongoing education efforts, many still question the value of title insurance for homeowners. As a resUlt, homeowners are being exposed to unnecessary and potentially evastating risk.
Far more information:ion, please visit wwwfct.ca.
*Name has been changed to protect the individual’s privacy
**For specific coverage details, please refer to the actual policy