An increasing number of homebuyers are turning to title insurance as a cheaper alternative to land surveys, but experts stress it's important to know what you're buying — especially what's covered and what's not.
A Nova Scotia man learned that lesson the hard way after discovering the backyard he thought he'd just purchased with a new house wasn't his after all.
Ryan Manning of Salmon River thought he had done his due diligence by purchasing title insurance that would compensate him in such cases. But when he ran into trouble, Manning was told his insurance covered the lender, not him.
Karen Decker of Stewart Title Guaranty — the same Toronto-headquartered company Manning dealt with — told CBC News title insurance is gaining popularity.
"As the awareness of its existence increases, more and more people want to get title insurance," Decker, a vice-president with the company and its senior counsel, said in a phone interview.
"It is a growing market for sure."
Know your types of title insurance
There are different kinds of title insurance available to homebuyers. Standard policies protect the purchaser against encroachments onto an adjacent property, previously undiscovered liens and issues around legal access to the property.
However, other forms of title insurance protect lenders only. Some banks require the latter before approving a mortgage.
Decker said the benefits of title insurance include a one-time fee for coverage for as long as you own your home, with an average premium of $125 to $325.
"The cost of a survey is generally more than what the cost of a policy is, so there's that financial calculation by purchasers," she said. "They may decide to go for the less expensive option."
She said timing can also factor into the decision, so if purchasers have a very tight closing date and it's not possible to get a survey in time, they'll opt for title insurance.
In other instances, people buy it because there isn't an existing survey or the survey that exists is old and may not be accurate.
Not the same as home insurance
Ivo Winter, a lawyer in Arichat, N.S., who deals primarily in real estate law, said some people confuse title insurance with home insurance.
"People will call saying, 'My roof leaked, my well failed, is that covered?'" he said.
Lawyers should advise their clients about all their options around protecting title — including survey, location certificates and title insurance, said Halifax real estate lawyer Catherine Walker.
She would like to see everyone survey properties they plan to purchase.
"Surveyors are our eyes," she said. "They go out, they identify physically what's on the ground, and it makes it so easy for us to sit with a client and review it and say, 'Is this what you think you bought? Does it match up?'"
However, Winter said it doesn't have to be an either/or situation.
"In an ideal world, we would like [homebuyers to purchase] both. But the fact is because of time constraints, it's often difficult to get a survey in time for closing, in which case often the client has no choice but to rely on a title policy."
There are limitations
The president of the Association of Nova Scotia Land Surveyors said he'd like to see purchasers given accurate and complete advice about their options.
"I just find the advice they're getting is skewed toward title insurance because of the dollar value," said Kevin Brown.
Like any insurance policy, title insurance has limitations. Policies only cover the property that is insured and do not cover environmental matters or Indigenous land claims.
Decker said title insurance is compensation-based. Every claim is considered individually and, if approved, may be settled in different ways, depending on what is being asked of the homeowner.
Sometimes it's a cash settlement, based on the appraised value of the loss.
"Is somebody asking for a payment to buy some land? Then we may decide to purchase the land. Is somebody saying that they want you to remove the deck that's encroaching onto their property? We may remove the deck and reconfigure it within your property," said Decker.
"Our options are varied."