Title Insurance

This month, I’m going to discuss a  U.S. concept that made its way over the border and has been gaining popularity ever since : Title Insurance.

Like any insurance contract, the goal of title insurance is to protect the insured against the risk of financial loss, in this case related to a real estate transaction.  Before going ahead, the notary and his clients must evaluate the risk involved in the transaction, when the titles are not clear.  When the risks of monetary loss are high, they have the option of taking title insurance to counter these risks.  There are two types of title insurance available, the owner’s policy and the mortgage loan policy, both apply to residential and commercial transactions.

OWNER’S POLICY

These policies insure the purchaser’s ownership right, as long as he/she remains the owner, against loss or damage that could occur due to irregularities affecting the property’s title or on a larger scale, against cases of fraud or falsified documents, clerical errors or omissions on the part of the notary, mistakes attributable to a cadastral renovation, defects or irregularities due to the absence of certificate of location or an updated copy of the existing certificate, etc… More extensive coverage can be obtained from the insurer on request.

MORTGAGE LOAN POLICY

This policy insures the creditor against possible loss if the title would be contested or if the mortgage would be non-opposable to a third party because of said defect.

Generally this type of insurance remains the exception, but allows or accelerates the realization of transactions, which under normal circumstances could not take place and it significantly reduces the number of transaction cancellations.  It provides the policy-holder with safe coverage with an average premium starting from $100. to $300. plus administration fees to obtain it.  When asked, the insurer may also supply a quote for a personalized plan.

In certain cases, the notary will withhold a sum to carry-out the correction of a title (minor derogation, servitude, judgment in legal recognition of right) as well as taking title insurance.  In some cases, the lender may demand it.  In any event, it acts as an emergency backup to facilitate certain situation, but does not correct the title.  It is always recommended to obtain correction of the title, if possible.
For more information, don’t hesitate to contact me at  450-227-7077 cell.514-688-3131 or by email at info@lecourtierdunord.com

Michel Labrèche Notaire

About the Author:  Me Michel Labrèche. This column was prepared by Mtre Michel Labrèche, notary, practising in Saint-Sauveur-des-Monts and Laval since 1983. Me Labrèche is also the president of Domaine le Sanctuaire des Lacs. For more information please see www.monlac.com.