Buying a home comes with plenty of expenses to plan for. There’s your deposit, inspection, legal fees, Property Transfer Tax and, depending on your purchase, a number of other closing costs.One item that often gets much less attention is title insurance.It may come up for the first time when you meet with your lawyer or notary to finalize your purchase, leaving you wondering what exactly you’re paying for and whether you actually need it.Here’s a straightforward look at what title insurance does, why it matters in British Columbia and what buyers should know before closing day.
What Is Title Insurance?
Title insurance is a one-time insurance policy designed to protect against certain problems involving the ownership, title or use of your property that may not have been discovered before you purchased it.British Columbia already has a very secure land title system. Our system is based on the Torrens system, which provides a public record of registered ownership, charges and interests in land.That means serious problems with legal ownership are relatively uncommon.But a title search cannot necessarily tell you everything about a property.There can be issues involving the physical property, previous renovations, municipal requirements, boundaries or other matters that aren't immediately obvious during the purchase process. Depending on the policy and circumstances, title insurance can provide protection against certain losses associated with these types of issues.If BC Has a Secure Land Title System, Why Consider Title Insurance?
This is one of the most common questions buyers have.British Columbia's land title system includes an Assurance Fund that can compensate property owners in certain circumstances involving title registration errors or title fraud.However, that doesn't mean every possible problem with a property is covered.A home's legal title is only one part of the picture. There can also be questions about what has physically happened on the property over the years.Was that basement renovation properly permitted? Is the neighbour's fence actually on the property line? Does the garage sit entirely within the lot? Was an addition built according to municipal requirements?Those are very different questions from simply asking who legally owns the property.This is one of the areas where title insurance may provide additional protection.Title Insurance for Detached Homes
With a detached property, you're purchasing both the home and the land it sits on. That creates a different set of potential concerns than you would have with a strata property.Depending on the policy, coverage may address issues such as:Unpermitted renovations or improvementsA previous owner may have completed renovations, additions or other work without obtaining all of the required permits. In some circumstances, a municipality could require the new owner to correct or remove that work.Encroachments and boundary issuesThe fence you see in the backyard isn't necessarily proof of where the legal property line sits. Sheds, garages, fences, retaining walls and even portions of a home can sometimes extend across property boundaries.Survey-related concernsDepending on the property and lender, title insurance may sometimes be used to satisfy certain lender requirements when an up-to-date survey isn't available.For buyers considering an older home, a property with substantial renovations or a home where boundaries aren't particularly clear, these are good questions to discuss with your lawyer or notary before completing the purchase.What About Condos and Townhomes?
Strata properties come with their own considerations.You're purchasing your individual strata lot while also acquiring an interest in the building or development's common property. Parking stalls, storage lockers, limited common property and previous alterations to the unit can all add another layer to the transaction.Depending on the circumstances and the specific policy, title insurance may provide protection relating to issues such as errors affecting parking or storage rights, certain undisclosed strata-related matters, or previous alterations that weren't properly authorized.This doesn't replace carefully reviewing the strata documents before purchasing.Documents such as the Form B, depreciation report, meeting minutes, financial statements and information about upcoming or approved special levies can tell you a great deal about what you're buying.Title insurance is another layer of protection, not a substitute for doing your due diligence before removing subjects.Lender's Title Insurance vs. Owner's Title Insurance
This distinction is important.If you're financing your purchase, your lender may require a lender's title insurance policy as part of the mortgage process.That policy is designed to protect the lender's financial interest in the property.It doesn't necessarily mean you have the same protection.An owner's title insurance policy is designed to protect you, the homeowner, against covered losses. When you're meeting with your lawyer or notary, it's worth asking exactly what coverage is being arranged and who the policy protects.Is Title Insurance Mandatory in BC?
There is no general legal requirement that every homebuyer in British Columbia purchase an owner's title insurance policy.Your lender, however, may have its own requirements as a condition of providing your mortgage.Whether additional owner's coverage makes sense for you is something to discuss with the lawyer or notary handling your transaction. They'll be able to explain the coverage available, exclusions that may apply and the cost based on your specific purchase.Lawyer or Notary: Who Handles the Closing?
In British Columbia, both lawyers and BC notaries regularly handle residential real estate transactions.For many straightforward residential purchases, a notary can handle the transfer of ownership, mortgage documentation and other closing requirements.A lawyer can also handle residential conveyancing and may be appropriate when a transaction involves more complex legal circumstances or where broader legal advice is required.Whichever route you choose, your legal professional will guide you through the final closing process and can explain the title insurance options available for your particular transaction.A Few Questions to Ask Before Closing
When you meet with your lawyer or notary, don't be afraid to ask questions. Closing documents can feel overwhelming, particularly if this is your first purchase.Some useful questions include:• Am I receiving an owner's title insurance policy or only lender coverage?• What specifically does my policy cover?• Are there exclusions I should know about?• Were any issues identified during the title search?• If I'm buying a detached home, are there any concerns about surveys, boundaries or previous renovations?• If I'm buying a strata property, have the parking and storage arrangements been confirmed?• Is there anything about this particular property that requires additional investigation?The goal isn't to become a title insurance expert. It's simply to understand what you're signing and what protection you have once the property becomes yours.Protecting More Than the Purchase
Buying a home is exciting, but there is a lot happening between an accepted offer and the day you finally receive the keys.Good due diligence during that period matters.Your Realtor, mortgage professional, home inspector and lawyer or notary each look at the transaction from a different perspective. Together, they help you understand not just the home you're buying, but the financial and legal responsibilities that come with it.Title insurance is one relatively small piece of that much larger process.If you're thinking about buying a home in Port Moody, Coquitlam, Port Coquitlam or elsewhere in the Tri-Cities, I'm always happy to help you understand what to expect before, during and after your purchase.The more you understand going in, the fewer surprises there should be when it's finally time to get the keys.
