It’s time for British Columbia to see the value of title insurance
Jul 8th, 2015 | By John Tracy
We are taught early on that saving money always makes good sense. But what makes more sense to you: saving a few hundred dollars on your home purchase by opting out of a title insurance policy, or saving $80,000 to re-pour your foundation? Hmmm, let’s think about that one for a minute…
A story out of British Columbia recently caught my interest. It is a contentious tale about a couple in Langley that has taken issue with the township after having to move the entire foundation of their dream home as the original was situated on their neighbour’s property.
Frankly, this type of story frustrates me as there is a very simple solution: having your client purchase a homeowner title insurance policy along with the lender policy. I have personally approved claim payments for more than $80,000 in situations similar to the one that this Langley couple is facing. In fact, one of the risks covered by a homeowner’s title insurance policy is the risk that the homeowner will be forced to remove or remedy any of their existing structures because they encroach onto their neighbour’s land. This is exactly what happened to the Pett family.
In other provinces, both the owner and the lender are title insured in approximately 90% of all residential real estate purchase transactions. The lender 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. Title insurance is unlike traditional insurance products — it does not just cover things that may happen in the future (e.g. title fraud), but also, title defects that have already occurred in the past, prior to purchasing the home, like this situation where the foundation was poured on the neighbour’s property.
However, in British Columbia (B.C.) 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. But for a relatively modest extra one-time premium (in some cases as little as $50) a homeowner can enjoy the benefits of a title insurance policy when purchased in conjunction with a lender policy. Yet for some reason, many legal professionals and homeowners still think title insurance is simply for lenders.
In many provinces, including Ontario, licensed legal professionals must discuss all options to protect a homeowner’s interest in title. This is not the case in BC and as such, B.C. consumers continue to be shortchanged when it comes to making informed decisions to protect their interests. While FCT has made significant progress concerning the education and awareness of title insurance in right across the country, clearly more remains to be done.
Let’s hope that the word continues to get out and we won’t see another situation like this one in Langley any time soon.