Title Insurance in Alberta: Everything You Need to Know
The title of your home is a legal document outlining the details pertaining to the ownership of your home. It includes its legal description, registered owner, type of land ownership, and any applicable liens and encumbrances. This document is one of the most critical documents in a real estate purchase transaction. This is why it’s important to understand its role and why you need title insurance to protect your transaction.
What Does A Title Document Outline?
Every residential home has a title document registered from the moment the land is prepared for a home. Even before your home is constructed, the title document exists for your piece of land and is updated as events occur on that property, such as transfer of ownership. If you secure financing – ie your mortgage – to buy the home, a lien will be applied to the title by your lender to ensure they’re paid upon the sale of that home.
Your title will also outline any easements on the property, such as if a retaining wall or berm is required to retain proper land drainage. If you build a brand-new home, you may also have restrictive covenants on your title which outline the requirements for architectural controls in your community.
Your title may also contain caveats or notations of events that apply to the property but are not a direct lien from a stakeholder. An example of a caveat would be if your home is located in a community in which an annual Home Owners’ Association (HOA) fee is required to be paid. The HOA doesn’t necessarily hold a stake in your home’s title, but the HOA is registered to receive funds from the owner of the property.
Why Do I Need Title Insurance?
Holding title insurance protects both you and any lienholders on your property against defects in the title, problems with zoning, errors in paperwork, encroachments by neighbouring homes, problems with easements, and other potential losses. If you don’t carry this insurance, you could be at risk of significant costs in future if any adverse events occur.
Title insurance is typically handled as part of your legal closing costs when you buy a new home. The premium is a one-time payment, usually around $275 on average, and doesn’t require renewal as long as you own the property. If you buy a home from a builder, this insurance policy and its fees should already be included in your closing procedures.
Title insurance isn’t mandatory in Alberta, but your mortgage lender may require you to hold a policy to, at minimum, protect their interests. Be sure to review what – and how much – is covered in your policy and determine if you feel it’s sufficient. You may purchase additional policies if you wish for any gaps in coverage, but these costs won’t be covered by your home builder.
So What Does Title Insurance Cover?
Your title insurance covers not only the flaws outlined in your policy (up to its limit) but also the litigation fees to bring the issues to court. If you don’t have title insurance and encounter a problem, you may be responsible for all these fees, which can be extremely expensive. This could be things like:
- issues with the ownership of the property
- any existing debts/liens against the property – things like unpaid taxes or other fees
- property assessment errors – things such as boundaries and surveys
- issues that could affect the potential sale of the property down the road
How Do I Receive My Title Document?
When you purchase a new home, you’ll work with your lawyer to close on your new home. Paperwork pertaining to your purchase is submitted to the Land Titles office for processing. Once this has been completed, your title will be mailed directly to you. This process can take several months to occur, so don’t be concerned if you don’t receive your title immediately.
If you buy your home from a builder, your paperwork and title insurance are handled for you and are applicable from the purchase date on your contract.
What If I Need To Make A Claim?
If you need to make a claim against your policy, you’ll need to get in touch with your insurance policy holder to follow their procedures.
The potential to encounter an issue in which you need to make a claim on your title insurance is incredibly rare, but it does happen. Not holding title insurance puts you at risk for major costs down the road should you ever need to bring an issue to court. However, when you buy your new home from a home builder, your title insurance is automatically instated at the time of closing, giving you peace of mind that the protection is there should you ever need it.
Title Insurance vs RPR (Real Property Report)
The benefits to getting title insurance over a real property report are twofold. One point is that the title insurance is less expensive and does not require a home visit. Title insurance is $275 whereas a RPR can cost around $800 or more. Another very important point is that if changes are made after purchase there is no need to update your title insurance. In contrast, the real property report would have to be updated at the homeowner’s expense.
Related Article: Homeowners Insurance: What You Need and Why You Need It
About the Author:
At Sterling Homes, our mission is to provide the opportunity for affordable homeownership without compromise. Over the last 70 years, Sterling Edmonton has quickly become one of Edmonton’s most popular builders. We bring more than seven decades worth of exceptional customer service, superior design and unparalleled craftsmanship to the greater Edmonton area. As a member of the Qualico Group, Sterling Homes focuses on greater Edmonton’s finest family communities, while being able to offer some of the region’s most family friendly prices thanks to volume purchasing power for materials, trades and land. This has not only made Sterling one of Edmonton’s bestselling, move-up builders, but also one of the industry’s most respected home providers. It is through our uncompromising commitment to our customers that we proudly deliver the Sterling Advantage – that’s why each and every home we build includes a 10-year home warranty, a completion guarantee and new home warranty excellence rating. Our Advantage is our pledge that, when you build your dream home with Sterling, we will deliver a timely, well-built home you’re sure to enjoy for years to come.
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