COOTE, HILEY, JEMMETT LIMITED

A Legal Survey or Title Insurance

You’re about to buy a Property – You can choose a Survey or Title Insurance

Purchasing a home, cottage, or other property can be a daunting experience, given the number of decisions that must be made in selecting and financing a property, particularly when the purchase of a property is dependent on the sale of an existing home.

One of the decisions that must be made in organizing such a purchase is whether to require a survey for full disclosure of the extent of title of the property, before the transaction, for ones own information and for financing approval, or to simply buy insurance against defects in title in order to get the release of mortgage funds.

To a degree, the choice depends on the type of property being acquired and the level of comfort purchasers would have in buying a home without a full understanding of the extent of their interests or of any potential disputes or problems regarding its use. It also depends on the type of assurance a lender may require before releasing mortgage funds.

 

A Legal Survey

Full disclosure of extent of title can be obtained through the purchase of a Surveyor’s Real Property Report. This is comprised of a plan of survey and written report based on actual survey of the property and research into the title records for the existence of any easement, rights of way, or restrictions that might affect the property. The survey plan shows the position of the building(s) on the site, the limits of occupation such as fences and hedges and any encroachments such as outbuildings, driveways, decks, and retaining walls. The written report draws attention to any issues or potential problems discovered during the survey. The integrity of the Real Property Report is assured through the mandatory professional liability insurance carried by the surveyor.

The Real Property Report can be used to ensure that the buildings and improvements are sited in accordance with municipal by-laws. In combination with the lawyer’s opinion of title, this report can be used to satisfy the lender that the property is marketable and suitable for mortgaging.

If the Real Property Report reveals problems with the title of the property or with the position of the improvements such as fences or outbuildings, a purchaser could require the vendor to rectify the problems before closing the deal or might be able to negotiate a reduction in the purchase price to provide for the potential costs of rectifying the problem.

One would also have the option, if warranted by the information revealed by the survey, to buy an insurance policy as additional protection.

 

Title Insurance, the alternative

A Title Insurance policy can be purchased, as an alternative to a Surveyor’s Real Property Report, to insure ones lender or oneself against any loss occasioned by a defect in title or an adverse claim. The lender’s interest is generally only exercised if a property is foreclosed and the lender is unable to market the property for the amount owing on the mortgage, due to a flaw in the quality or extent of title.

The property owner, if included as an insured party, is protected against loss if there is a claim against the property as a result of a flaw in title or an encroachment or similar circumstance. If there is a problem it generally remains undisclosed until a claim or action is begun, at which time the insured must demonstrate a financial loss in order to be compensated. Loss of enjoyment is not normally compensated as there may be no monetary value associated with such loss.