IS A RIDER NECESSARY WHEN PURCHASING TITLE INSURANCE?

Firstly…do you know what Title Insurance is?

Title Insurance is an insurance policy that protects you against zoning laws, building code deficiencies and unknown title registrations that can affect the transfer of your new property into your name.

Title Insurance has become an accepted practice by lenders in lieu of getting a survey certificate or zoning memorandum. A title insurance costs approximately $250 where a survey certificate can cost $400 and upwards.

Because title insurance insures the property from zoning violations should any building on your property encroach onto a neighboring property your lender is insured against this as it may affect the value of the property. For example, your garage is 2.5 feet on your neighbors yard…the lender is insured for the cost to reconstruct on the right property.

If you’ve read the previous paragraph, you may have picked up that it is your lender that is insured and not you. That’s right! As a condition of providing a mortgage to you the lender ensures you take out an insurance policy that insures their mortgage monies provided to you.

What does that mean?

If you have a problem with your property, whether it does not comply with building codes or does not conform to the zoning regulations, any monies paid out the policy are paid to your lender and not to you. It effectively reduces your mortgage but does not provide you with the necessary funds to correct the violation.

What is the solution?

When you are meeting with your lawyer to discuss the title insurance policy ensure that you inquire about purchasing a rider for the policy that will also insure you as the homeowner. The rider cost can vary from insurance company to insurance company and may be based on the value of your home but will insure that you are also covered and in the event that you must remedy a building code issue or reconstruct any part of your home to comply with zoning laws that you have the funds necessary to do that.

If you have further questions regarding title insurance policies and the cost of them please get in touch with me by email at marciabergen@shaw.ca or call me at 204 960-6872. I am happy to discuss this with you or direct to you a lawyer who can further assist you.

Categories: Paperwork.