New construction title insurance: advice from your mortgage brokerEvery self-respecting young couple dreams of moving in together. If possible, via a new real estate purchase. And when it’s a new build, it’s even better, the dream comes true. However, this type of real estate purchase presents pitfalls that should be mastered before committing. Few know about title insurance. Indeed, there may be mortgages lifted on the property. And if the promoter does not meet his financial obligations, we come knocking at the door of the new owners!
*Example of a new construction purchase that turns into a nightmare without title insurance
This kind of case is not frequent, but it does happen, and instead, when you do not expect it. You buy a new condo with your savings. As you live your daily life and have no overdue repayments, you find an usher on your doorstep one fine day. This tells you that the promoter has due invoices for materials, that he did not pay subcontractors. There is also a mortgage hanging over your condo.
You obviously want to defend yourself, but it is expensive. Lawyer fees, bills from subcontractors to pay out of your pocket when you have already paid the price of the condo… These hassles last for years, without having any guarantee that the sad affair will end in a neutral way for your finances. In some cases, these unfair charges can amount to tens of thousands of dollars. Is this unfair? Yes. Is there a way to protect yourself? Yes, it is called title insurance.
What is that?
In the world of notaries, the title is the document that establishes the ownership of the real estate. Title insurance, therefore, covers this property right. In other words, it is a protection in case of dispute or concerns related to your title deed.
Title insurance protects you against the scenario explained above, but many other issues related to your property. For example, in case:
- Of forgery of your title by a third
- If someone encroaches on your land
- When your property does not comply with zoning rules
Why title insurance? In short, almost every time there is a problem with your title deed, insurance kicks in. Title insurance is attractive for the purchase of new construction, but also of an existing house. You only country it once for protection that lasts as long as you own the property. Usually, title insurance is taken out when the purchase or refinancing contract is signed. But it is also possible to contract such protection later (a few months, a few years later, etc.).