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Wednesday, July 27th, 2016

Why You Should Get Title Insurance for Your Investment Property

Why You Should Get Title Insurance for Your Investment Property

Protect-Your-Investment-With-Title-InsuranceWhen buying an investment property in Vancouver, there are so many details to take into account that some home or condo buyers neglect to think about title insurance. Title insurance can save you a lot of headaches and avoid costly legal disputes that can pop out of nowhere.

Title insurance is now considered so important that many lenders will insist you have it before they will approve the mortgage application.

What is Title Insurance?

It’s simply a very straightforward form of insurance that will help protect you from a variety of potential legal and financial complications. There are variety of issues that you can encounter such as:

  • Zoning disputes
  • Financial liens against the property which weren’t discharged
  • Land survey mistakes
  • Encroachments
  • Title fraud
  • Unpaid property tax

This is just a sampling which of what you might unexpectedly encounter.

The real estate lawyer who is representing you would likely to advise you to get this insurance to protect yourself from potential liability issues. They may insist you buy it because it also protects them and it will help pave the way to a smoother closing.

There are 2 Forms of Title Insurance.

They are as follows

  • Homeowner’s Insurance Policy – Since you need home insurance and will likely be talking to an insurance broker, you would be best advised to raise the issue of title insurance with the broker or company. You should find out if it includes title insurance, or if it has to be purchased separately or as a rider. Make sure you are clear what the policy covers before purchasing, and that it will last as long you reside on the property. Another thing to look for is that the insurance properly reflects the market value of the property.

 

  • Title Insurance Sold by the Lenders – Your lender may also have a title insurance policy which you could buy. Make sure you compare the costs between what your lender is charging versus an insurance company and what the insurance covers.

The cost to buy title insurance could be anywhere from around $150 to as much as $350 so that’s why it’s worthwhile to do a little comparison shopping before you buy.

Title insurance should last you as long as you live in your home. Remember that if you did buy your title insurance from a lender that the insurance may or may not valid if you refinance the mortgage or change lenders. You may not be necessarily able to switch your title insurance to a new lender and can do so under only specific circumstances.

So, don’t assume that if you are making changes to your existing mortgage or using a different lender that your title insurance will still apply. If any of these circumstances occur then one of your first questions should be whether your title insurance will follow or if you have get a new policy.

Your investment property is very probably one of the biggest investments that you will make in your lifetime. Protect yourself and take a hard look at buying title insurance.

 

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