Buying a house is one of the biggest investments you will make in life. Whether it’s your first home purchase or your fifth, there are numerous responsibilities that come with a newly bought home.
While it may feel overwhelming – as well as exciting – it’s important to ensure that you and your new home are well protected. Although most of us know about fire insurance and homeowner’s insurance to protect our home’s physical structure and personal contents, it’s important not to forget about insurance coverage for our property’s title, which is just as important but more easily overlooked. One of the ways this is done is through title insurance.
What Is Title Insurance?
First, it’s necessary to understand what title insurance is. “Title” refers to the property’s ownership, while “title insurance” is a form of insurance that protects against risks to your title.
Title insurance can oftentimes protect both lenders and homebuyers against loss or damage occurring from illegal liens, encumbrances, or defects in a property’s title. Common claims filed against a title are tax liens, builder’s liens, certificates of pending litigation, and encumbrances such as mortgage loans, and home equity lines of credit (HELOC).
It’s essential to learn as much as you can before making such a substantial purchase. When in doubt, don’t hesitate to consult an experienced real estate lawyer about your specific situation. To get you started, here are some of the most significant benefits of title insurance.
Benefits of Title Insurance for the Homeowner
Title insurance can protect you for as long as you own the property. It protects against a number of risks. These risks may include:
Encroachments that would be disclosed by a new survey
For example, title insurance protects you if a neighbour’s deck is being partly situated on your land. Title insurance also covers encroachment issues such as if your backyard shed is actually on your neighbor’s property and must be removed. If the encroachment cannot be removed for safety reasons (such as a retaining wall), then you may need to compensate your neighbour for the encroachment, and title insurance may provide coverage for such costs.
Not having a survey
Although having a survey is advisable, title insurance can offer legal protection in lieu of a survey by transferring any risks that may have been disclosed by a survey, to the title insurer with respect to defects in title and other defects such as encroachments.
Someone other than the homeowner having interest
For example, a previous owner of the property not being properly discharged from title or a previous owner claiming a beneficial interest or unregistered title to the Property.
Liens from contractors, taxing entities or previous lenders
Title insurance can protect homeowners from charges accrued by previous owners. For example, if the former owner failed to pay municipal or school taxes and the tax authorities file a tax lien on title, title insurance may protect the new owner from title defects and unpaid tax liens or assessments. If previous mortgages or charges by lenders of the previous owner remain on title, title insurance may cover the costs associated with discharging these liens from title.
Forgery or fraud
Title fraud, which occurs when a person uses false identification to impersonate you to obtain a mortgage or sell the home without you knowing, is one of the more common risks that can be addressed by title insurance. Such consequences can be devastating and recovery through the Courts or other means without title insurance can be time-consuming, stressful and costly.
Title Insurance vs. Homeowners’ Insurance
Some homeowners assume that title insurance is included within a home insurance policy. Because of this misunderstanding, an alarming number of Canadians today do not have title insurance.
While home insurance may protect homeowners from unexpected circumstances that occur on or against their property or its contents, such as fire or earthquakes, title insurance protects the homebuyer from unexpected circumstances that affect the title to the property, such as financial loss from title fraud or other issues. The title insurance’s coverage is often less tangible and inconspicuous compared with the physical damage that a fire may cause, but the financial consequences of title fraud or a fraudulent mortgage registered against your property may be even more severe.
Fortunately, unlike home insurance, title insurance is a one-time premium that is typically purchased at the same time as the property. However, title insurance can also be purchased by existing homeowners who already own their property.
Are You Looking For a Real Estate Lawyer?
Title insurance can only be purchased through legal professional. If you, or someone you know, is looking for a real estate lawyer or would like more information on ordering title insurance, contact Bernard Lau and Co. Our knowledgeable and experienced team can provide personalized advice on a case-by-case basis.
To help protect buyers in the real estate market, the BC Government is enacting a mandatory three-day Homebuyer Protection Period (HPP). This process, previously called the three-day “cooling off period,” becomes effective on January 1, 2023.
Some people are unclear about how this works and the effect it may have on the housing market. If you have questions, contact the legal team at Bernard Lau and Co. to request a consultation.
Here is everything you need to know about the HPP/three-day cooling-off period.
What Is the New Three-Day Cooling Period?
The HPP, or three-day “cooling off period,” is a safety net for buyers to conduct their due diligence and re-consider their offer before their offer becomes binding. During these three days, potential homebuyers can perform due diligence such as scheduling inspections, confirm financing and decide whether to proceed with the purchase of the property.
However, to make things more fair to the seller, certain fees are payable if buyers make the decision to back out of a sale during the cooling period that is unrelated to any subject-clauses:
Buyers wishing back out of a sale must pay 0.25 percent of the purchase price, or $250 for every $100,000 of the price. This fee helps balance the interests of both the buyers and the sellers by compensating the seller in the event an accepted offer falls through, while preserving the buyer protection mechanism at a small cost to the buyer.
Backing Out of a Deal during the Cooling Period
Homebuyers who no longer wish to purchase the property during the three-day cooling period should serve the seller with a written rescission notice in at least one of the following forms:
- email with read receipt
- registered mail
- personal service
The rescission notice must include:
- names and signatures of buyer
- name of the seller(s)
- address and description of the property
- date of notice
Note: Buyers will still be able to make offers conditional on home inspections or financing at any time. The Homebuyer Protection Period does not prevent buyers and sellers from negotiating the inclusion of traditional subject conditions and removal periods in their contracts. If subject conditions exist in a contract and are not waived, buyers could potentially walk away from accepted contracts without needing to pay the 0.25% penalty.
Your Real Estate Lawyer in Richmond
The 3 day cooling period is still very new and has not been implemented yet. Accordingly, there will be more answers in the coming months as the cooling period comes into effect. This article is only for information and reference purposes. You should not rely on any information in this article before consulting a lawyer or other qualified professional. Bernard Lau and Co. and its principals will not be liable for any damages resulting from the use of the information and you should obtain independent legal advice prior to acting on the basis of any information in this article.
The accomplished legal team at Bernard Lau and Co. can help you with your next home sale or purchase. Our team has the real estate and litigation experience to guide you through all stages of your real estate transaction, from negotiating the terms of the Contract of Purchase to collapsing deals.
‘Acted with malice’: B.C. man’s negative reviews on Google, Yelp cost him $90,000 in defamation case
A disgruntled customer who was found to have defamed a B.C. wood products company in his Google and Yelp reviews has been ordered by a judge to pay $90,000 in damages.
Buying a house is one of the most significant and costly purchases you will ever make. Because buying a house is often a long-term investment that can cost you a considerable part of your savings, you may want to ensure that you consult the proper real estate professionals before you commit to anything. Besides a real estate agent, hiring a real estate lawyer is also recommended.
Hiring a real estate lawyer is more than just hiring someone to read the fine print: a real estate lawyer can help safeguard your rights and interests before you commit yourself to a significant transaction such as a home purchase or sale. In this article, we discuss why you should consider hiring a real estate lawyer before you make or accept a real estate offer to purchase or sell your home.
1. A lawyer can help safeguard your interests
Just like a real estate agent, a real estate lawyer can help you safeguard your rights while buying or selling a house, but in different ways. While a real estate agent can help you find your dream house and negotiate a good price, a lawyer is trained to give you legal advice and can spot or address legal issues that may arise that a real estate agent may not be trained to do. A real estate lawyer works for you during the real estate process, representing your interests, and negotiating legal terms on your behalf. Your lawyer can assist you in navigating the complexities of real estate transactions and can function as a safeguard. Just like real estate agents, lawyers are obligated to act in your best interests and can help to give you additional peace of mind as you take the next step toward homeownership.
2. A lawyer can increase transparency
Someone needs to read all the documents and comprehend their contents before you sign them and agree to their terms. Hiring a real estate lawyer to review your real estate agreements and documents and aid in negotiations from the start of your real estate transaction can help ensure transparency so that you know what the transaction entails. You may rely on your lawyer to explain complex legalese, advise you on your legal rights and obligations, and ensure that your needs are properly communicated, represented, and documented during this process before you sign on the dotted line.
3. Real estate lawyers have legal experience
Your real estate lawyer may have experience handling a variety of real estate transactions. They should have a breadth of knowledge in real estate transactions, and they should thoroughly understand real estate laws that may help identify pitfalls or other legal issues that you may not have considered. It’s highly recommended to have legal support to help you navigate the real estate transaction and to minimize your legal risks in your real estate transaction.
4. A lawyer can help protect you from financial loss
A real estate lawyer can help protect you against financial loss. For example, if the house is discovered to have severe problems, such as mold, a leaky roof, or even an oil tank in the yard, a sales contract without legal protection clauses addressing these problems can be quite costly for the buyer. Engaging a real estate lawyer can help protect you through their suggestions of various legal options that you can consider before you complete the transaction. A real estate lawyer may even help negotiate the inclusion of the terms of sale in the contract so that the buyer can be protected if problems are discovered. The earlier you act, the more options you may have to remedy these problems. As the Latin saying goes in real estate law, it’s a caveat emptor, or buyer beware.
Are you looking for a real estate lawyer in Richmond?
If you are looking for a real estate lawyer in Richmond, contact us at Bernard Lau and Co. Our team is ready to answer your questions, help you resolve real estate legal issues, and assist you in your next real estate transaction.