Hidden Title Defects

Property title defines your ownership rights. Defects in the title will restrict or even invalidate them. Some of these impediments may be hidden, due to errors or omissions in the land registry. You'll be protected by having the property surveyed or title insured.

Why You Need A Survey

A land survey will give you more insight into what you buy. It's a set of drawings and documents prepared by a licensed professional which defines legal boundaries of the property, location of all structures, fences, driveways and adjacent roads.

Lenders may ask for a survey to minimize own risk. They want to make sure there're no title defects which might forestall a smooth sale when the mortgage isn't paid off.

Surveys provide an accurate, up-to-date visual representation, based on actual field measurements. You'll see precise dimesions of the premises, which may not correspond to abstract data included in the title.

Other title problems to look for in a survey are:

  • Encroachments - Illegal structural intrusion into another property. It happens if a part of some structure is built on the neighbouring land.

  • Easements - The right to use someone's property for a specific purpose. For instance, a cable company may run lines across properties and have unrestricted access to these lines.

    Most of the time, permanent structures (like garden sheds and decks) can't be built over an easement.

  • Right Of Way - Other parties may be permitted to pass through your land to gain access to some areas or another property.

Survey results have to be reviewed by a lawyer, and probed for municipal and subdivision violations. When defects are found, you should consult your lawyer how serious they are and what can be done about them.

Hopefully, the seller already has an up-to-date survey. Otherwise, make your offer dependent on the current survey and negotiate who is going to pay for it.

What Is Title Insurance

Title insurance pays for expenses associated with repairing the property title. It's another approach to the transaction closing which can be used instead of a survey.

If a transaction is title insured, the land survey and some off-title searches can be skipped. The insurance doesn't warrant a clear title, but it compesates new homeowners when defects unknown at the time of the purchase manifest themselves later.

You'll be covered for a variety of losses resulting from encroachments, easements, fraud, liens (financial claims registered on the property), and any other title related issues detrimental to your ownership.

There's a one time premium which will cost you about $350, depending on the property type and the price.

Some title insurance companies offer a fixed cost closing, so you can plan your expenses without being caught short of funds on a closing date.

Other services may include the deferral of closing costs. You can get an interest free loan at a fee around $100. After six months the loan has to be repaid or converted to an unsecured credit with a higher rate.

Which Option To Choose

Although most lenders agree to close transactions without a full disclosure, title insurance doesn't entirely eliminate the need for a survey.

There're reasons to believe that pursuing both closing options concurrently will serve your interest better:

  • Title insurance provides a suplementary layer of protection for survey errors and omissions, and some companies will insure you for your lawyer's negligence and identity theft.

  • If you want to build an addition to your house, the survey will be necessary to get a municipal permit.

  • When you decide to sell your potential buyer can make the transaction conditional on survey results.

  • Title insured transactions are finalized with far less due diligence. If you skip the survey you'll make a huge financial commitment without knowing all inherent risks.

  • There're restrictions on what insurance can pay for various defects. Some perils are excluded, and your coverage may be too small to remedy a problem to your whole satisfaction.

    Even if you are paid in full for the repair of a defect, some market value and functionality of the property may be lost.

  • Not every claim is successful, and you may have no other alternative but to go to court to enforce your rights.

© housepages.ca - all rights reserved
Hire A Lawyer