What is Title Insurance?
Further to my recent post on RPR’s, title insurance is often offered in place of a current RPR. Alot of new buyers are hesitant to accept insurance instead of RPR, but in reality in may be in their best interest, and Ill explain why.
Title Insurance is relatively new in Alberta (about 10 years old), but has been around for a century in the United States. Alberta has created a government-guaranteed system called TORRENS – which goes far beyond Eastern Canada and US standards, so you can be sure that all information is accurate and INCLUSIVE ( American systems dont disclose everything, such as unregistered mortgages!)
So what is title insurance? Basically its insurance that covers the buyer (or seller) from problems occured through the transfer of land. The scope of coverage has recently been expanded to cover nearly everything. Some examples:
Covers the gap between submission date and registration – often things can occur between the time of purchase and the time it takes to transfer title with the city (can take up to 5 weeks). This insurance will cover this time period.
Covers deficiencys on RPR – this is very important – and in fact after doing more research on this, I am quite amazed by the amount of stuff this will cover ie. unregistered easements, hidden deficiencies, builder liens….
Covers Unknown special assessments in condos
Covers any issues that would have shown up on the RPR, thus avoiding the need for an RPR. It covers non compliance issues such as lack of permits or failure to meet building codes
Even covers known defects (ex. deck over property lines, deck too big for area, etc…)
Coverage continues after closing date – this is important to cover things like fraud, impersonation, forgery etc…
All of this seems like a no brainer to choose title insurance over RPR. However there is one downside to getting the RPR – if you accept it when you purchase a property, it does not automatically get passed on when you decide to sell it. Therefore, if the coverage doesnt include making a modification to something not complying in the RPR, the new buyer will either have to decide to get title insurance as well, or some resolution will need to be made to fix the problem. In this sense, you may just be delaying changes that will need to be made at your expense.
Still title insurance, is a great alternative if a complying RPR is not convenient to obtain. It is much cheaper, at a cost of usually $200-$300. The best idea is always to ask your lawyer or call First Canadain Title get some more information before making a decision on title insurance vs. RPR.
