Features and Benefits
Since it was introduced to the Canadian marketplace in 1991, the frequency with which title insurance is used and the variety of ways in which it is applied have increased significantly. Title insurance is used by all types of real estate industry professionals, including lenders, mortgage brokers, lawyers, real estate agents, developers and builders, to facilitate real estate transactions. It is being used for all types of real estate transactions -- residential and commercial purchases, refinances and mortgage assignments -- and is widely accepted by most Canadian financial institutions. Today there are several companies that offer title insurance and related products and services to the Canadian marketplace.
What is title insurance?
Title insurance protects the insured (the lender and/or purchaser) from loss or damage resulting from title or survey defects. Among the coverage a title insurance policy provides is protection against defects in title, unmarketability of title, invalidity or unenforceability of the insured mortgage, and fraud and forgery which affect the insured's interest in the property. As a result of these forms of protection, title insurance can allow the mortgage process to be redesigned to eliminate steps and reduce disbursements.
How is title insurance used by lenders and mortgage brokers today?
Lenders and mortgage brokers serving Canada's residential mortgage market use title insurance in several ways. Almost all Canadian lenders accept title insurance as either a replacement of or supplement for their usual survey or real property report requirements. In this regard, lenders and mortgage brokers alike provide significant cost and time savings to their clients.
Additionally, many lenders have expanded their acceptance of title insurance beyond typical survey matters and now allow title insurance to be used to replace or supplement almost any issue relating to title. In some cases, title insurance is now accepted as an alternative to the traditional solicitor's title opinion. In these cases, the cost and time savings can be even greater.
Another common use of title insurance among lenders is customized title-insured mortgage refinance and assignment programs. In these situations, the client of the lender or mortgage broker already owns the property he or she is mortgaging and may be using their existing property as security for a new loan or line of credit. They also may want to move their existing mortgage from one institution to another. To develop this type of program, the lender and title insurer work together to customize a transaction closing process that is designed to offer enhanced security to the lender, as well as greater speed and bottom line savings to the borrower. Lenders can even brand or "private label" these programs so they can market them as part of their portfolio of mortgage-related services. The popularity of this type of program has grown over the past few years to the point where today, almost every type of Canadian lender (from the large national banks, trust companies and finance companies to the one-branch local credit unions) offers some type of customized title insured program.
A typical program generally includes services such as: all searches necessary to issue a title insurance policy, preparation of the mortgage and related documents, forwarding all documents to the lender for signature or arranging for execution of the documents, registration of the mortgage document and issuance of a policy of title insurance to protect the lender. The main benefits of a customized title-insured mortgage refinance or assignment program are reduced costs, competitive fixed prices, instant funding (funds available immediately upon document signing), fast service (with typical transactions completed within 72 hours) and the convenience of in-branch signing.