September 27, 2023

What are title deeds and title insurance?

In real estate, part of the notary’s job is looking through a property’s chain of title. The goal is to establish that each successive sale transferred all property rights from the seller to the buyer.[1] What if the notary notices irregularities? This is where title insurance comes into play. Find out everything you need to know before your meeting with the notary.

What does a title search meanin Quebec?

The notary ensures the seller is the true owner of the property by carrying out various checks, confirming whether:[2]

  • The seller has the right and capacity to sell the property
  • Another person must consent to the sale
  • The certificate of location is all in order

The certificate of location confirms whether the land dimensions are correct, whether the dwelling was built per municipal by-laws and zoning laws, and whether there are any rights of way.

The notary will examine the title deeds for any details likely to affect, limit or devalue your right of ownership. They’ll confirm that the property is free of all rights and mortgages, that it is not subject to encroachment by a third party, and there are no violations of public law restrictions.[3]

You can view a title deed on the Registre foncier du Québec en ligne website by entering the property’s registration division, cadastral parish, lot number and secondary designation.[4]

Purpose of title insurance

Title insurance is a property and casualty policy designed to compensate an insured who incurs damage in relation to a covered risk. It provides protection against but doesn’t fix an irregularity.[5] It isn’t required, but many notaries recommend purchasing it.

Like any insurance product, title insurance has inclusions, exclusions and conditions relating to claims. Here’s a few examples of the risk it covers:[6]

  • Title defects
  • Non-compliance with municipal by-laws
  • Encroachment on a neighbouring lot
  • Fraud, forgery or identity theft
  • Debts incurred by the previous owner
  • Construction legal hypothecs for prior completed work
  • Unknown servitudes
  • Survey plan errors
  • Title search errors

The premium is set using several factors, including market value at time of purchase, coverage and risk level. It costs about $375 for homes under $500,000.[7] The insured is the buyer of the property, but the seller usually pays the one-time premium.[8]

Get help from a real estate broker to avoid unpleasant surprises when signing the deed. Your broker will help you with your search, carrying out the necessary checks so your transaction closes smoothly.

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See also:

15 questions to ask when visiting a house

12 factors to consider when buying land to build a house

The ABCs of real estate banking terms

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