When you purchase your home, your previous owner signs over a transfer document called a deed over to you. This provides you with title, or legal ownership of your home. Understandably, protecting this title is of fundamental importance. Many title insurance providers offer title insurance, which aims to ensure against common title issues.
There are two types of title insurance policies available-owner’s policies and lenders policies. Both are bought through a one-time payment, called a premium, that can be bought at any time. Providers may differ in the losses they provide coverage for, but in general owners’ policies provide coverage for issues like:
Title fraud- for instance, someone may fraudulently present themselves as owners of your home for a mortgage and then disappear with the funds, leaving you with significant debt.
Unknown defects in title- issues that prevent you from having clear and unobstructed right to the home.
Registration errors- clerical or procedural errors that may create uncertainty over issues like your identity, the identity of the property, or your right to the property in general.
Previous leverage or liens taken out against the home from previous homeowners- a previous owner may not have discharged the mortgage correctly, or have outstanding utilities bills.
On the other hand, lender’s policies will provide title coverage to your mortgage provider to protect the lender from losses in the event that the property’s mortgage is invalid or unenforceable. A mortgage provider may wish that you purchase a lenders policy as a condition upon your mortgage to secure their loan.
Title insurance is not mandatory and does not provide coverage for non-title issues like flooding or theft. It is important to recognize that it does not have the same function as home insurance.
In contrast, new homes are entitled to certain warranty coverage to be provided by the builder on their home under The Ontario New Home Warranties Plan Act.
For the purposes of the Act, a new home is one that has not previously occupied, and is not a conversion. In short, it is for new build homes and condos. A seven-year warranty, the coverage decreases over time.
Up to the first year, the Act insures that the home is built to professional standards and uses material free from defect, follows Ontario Building Code violations, and requires that the home be fit for habitation.
Up to two years of ownership, the Act will cover basement and wall water penetration, many electrical, plumbing and heating issues, and issues that violate the health and safety protocols under the Ontario Building Code.
Up to the seven-year mark, the policy will cover major structural defects.
For condos, the policy will also provide similar coverage for the common areas and elements of the building.
Your new home warranty coverage under the The Ontario New Home Warranties Plan Act is administered by Tarion. It is their job to enroll homes into the policy, license home builders, resolve disputes between builders and homeowners, and investigate illegal building practices. As such, they oversee the relationship between builders and homeowners and protect new home owners by ensuring their homes are built according to a provincial standard and that they are given full protection of the warranty.
Though these policies cover the major insurance available to Ontario homes, they are not exhaustive. Building parts, home appliances, and other insurance policies are abundant and provide differing levels of coverage to aspects of your home. As a home buyer, being cognizant of all the protection available to you is a critical aspect of home ownership and protecting your most valuable investment.