EXPERTS IN SOLUTIONS
EXPERTS IN SOLUTIONS
August 22, 2016 Real Estate and Construction
This bulletin provides an outline of the key features of an insurance product with which, in our opinion, every real estate professional must be familiar. In particular, title insurance helps to close many real estate transactions, in addition to protecting a property owner or hypothecary creditor against the risks that a jurist (notary or lawyer) may not be able to detect in the context of his due diligence for a real estate transaction (sale or financing).
Our article provides an outline of the key features of an insurance product with which, in our opinion, every real estate professional must be familiar.
In particular, title insurance helps to close many real estate transactions, in addition to protecting a property owner or hypothecary creditor following a real estate transaction.
There are two types of title insurance policies: the owner’s policy (protecting owners of immovables) and the hypothecary creditor’s policy (protecting creditors with a hypothec on an immovable).
Essentially, the purpose of title insurance is to cover a risk that could interfere with the owner of the insured immovable’s right of ownership or a risk with respect to the hypothecary creditor’s hypothec, up to the amount of the policy, which general corresponds to the property’s purchase price (for an owner’s policy) or the value of the loan (for a hypothecary creditor’s policy).
In residential matters, title insurance will indemnify the insured for the loss caused, in particular, by:
Coverages offered by title insurance provide protection against risks that a jurist (lawyer or notary) may not be able to detect in his searches and verifications of prior titles, not to mention an error or omission in the context of said verifications.
However, title insurance is not insurance against latent defects, nor insurance guaranteeing the hypothecary debtor’s payment. It also does not protect against the risks that the insured has permitted, created, or accepted, nor does it cover environmental problems or construction defects.
Ultimately, it is important to specify that the insurance coverage may vary from one title insurer to another and may differ in the case of commercial title insurance. Whether taken out mainly for legal hypothecs that unpaid sub-contractors could publish against the immovable after its sale (or after concluding the hypothec), a surveying error, or by-laws that have not been respected, title insurance is an additional protection that completes your lawyer’s or notary’s verifications in the context of a real estate transaction.
This bulletin provides general comments on recent developments in the law. It does not constitute and should not viewed as legal advice. No legal action should be taken on the basis of the information contained herein.Back to the list of publications - Real Estate and Construction