Understanding Title Insurance

Helping your borrower understand the need and cost of title insurance is crucial. 

To some borrowers, title insurance may sound like an unimportant extra.  However, the inherent value it represents can be a life saver if troubles should arise with the title of their property.

20 years ago, Canadians had never heard of it.  Today, it is required by both conventional and MIC lenders.

But where did the need for title insurance come from?

In the beginning, it was marketed as a replacement for survey certificates.  As it developed, lenders realized that the true benefit was coverage for fraud or other title defects.  Lenders felt that the coverage went beyond what a traditional written Solicitor’s Opinion provided.  As a result, title insurance has now been adopted as a requirement of most lenders at closing.

As industry professionals, we are all too familiar with the need for title insurance and the requirements behind it, in order to finalize a deal.  The borrower however, will likely need to be made aware of the need for this type of insurance.  As a broker, you’ll likely have to explain how the insurance acts as a protection against any losses or damage that is caused by the title of the property.  They’ll also need to be aware of the added closing costs as well.

While not overly expensive in the grand scheme of a property purchase, any additional costs can be upsetting to borrowers.

Your borrowers will see the cost set out on the closing documents at the lawyer’s office.  It’s in your best interest, as a broker, to work the cost of the insurance in when estimating the closing costs for your borrower.  This in turn, will avoid any last-minute surprises and stressors.  And as always, if you have any questions, the underwriters at Kokanee Mortgage are always here to help.