Title Insurance Versus Real Property Reports

Title insurance is a valuable tool and is worth discussing with the buyer. Since this chapter deals with the sale of real estate, only issues that affect a seller will be mentioned.

A title insurance policy guarantees (with specific limitations as set forth in the policy) your title to the property, including such things as land improvement Insurance Backed Guarantee encroachment issues, title fraud, and unknown violations of local property use statutes. the earth.

A Real Estate Property Report (RPR) will show whether there are utility easements or rights-of-way on the property, and whether there are fences, trees, buildings, gardens, embankments, driveways, walkways, swimming pools, home additions, and other property. the improvements are actually on your property – or if something invades your neighbor’s property into yours.

Since title insurance was introduced in Canada in the early 1990s, it has been marketed as an inexpensive replacement for a property study. Arguably, buyers are putting themselves at risk by not getting an up-to-date survey, even if they have title insurance.

This is why my advice to buyers is not to accept title insurance in place of a current RPR with compliance. Even if there are no problems with the property, buyers will have to pay for title insurance each time they refinance their home. They will also have to pay a new RPR when they sell the house.

Title insurance is used most of the time in the United States. This is due to the continuing poor state of deed registration systems in many states and the inconsistent way in which US surveyors are licensed and regulated from state to state.

In Alberta, the Torrens system allows for the orderly opening of land for development and provides security of tenure through reliable documentation of land ownership and a provincial guarantee of an interest in the land.

As a seller, there is every incentive to use title insurance instead of RPR if a new one is required; it has a lower cost and passes any obligation if an unknown problem is discovered after possession. If a buyer agrees to this change to the standard purchase contract, it is imperative to make changes to the contract that cover all RPR topics, as well as the encroachment and land use sections. Without these additional changes, the seller can still be held liable if a defect is discovered (for example, a new garage is located on a city property).

SELLER’S FINANCING AND SELLER’S RECOVERY MORTGAGE

Seller financing is typically done through a seller return mortgage. A seller’s return mortgage is one in which the seller of the property is not paid a portion of the purchase price, but instead registers a mortgage with provisions for repayment of the property. In this case, the title to the property is transferred to the buyers. There are pros and cons to vendor payback mortgages.