Conducting a title search when buying a home in Ontario can prevent costly, stressful mistakes. Imagine moving into your new home and receiving a bill for thousands of dollars of the previous owner’s unpaid bills. That nightmare is exactly what a title search aims to prevent and rectify before you get the keys to your new home.
What is a Title Search?
Before closing, a homebuyer’s lawyer reviews land title records (like the deed, parcel register, etc.) to verify the legal ownership of a property and see if there are any claims, liens, charges, encumbrances, or restrictions that might affect the property. The title of the property and any encumbrances on it may impact the ability of the property to be sold. In Ontario when using standard real estate forms, this is outlined on page 3 in section 8 of the “Agreement of Purchase and Sale.”
The goal is to confirm the seller’s legal right to the property, identify any outstanding debts or claims against it, and uncover any conditions or restrictions on its use. This process involves reviewing various property and public records, including deeds, court records, property and name indexes, and other documents to uncover the history of a property’s ownership, ensuring the seller can transfer ownership to you, the buyer.
Why Do a Title Search?
The title search process is not just a formality; it’s a critical step in ensuring that the property you intend to buy doesn’t come with any hidden surprises. As part of the real estate transaction due diligence process, you need to ensure that the home has no issues that could affect your ownership rights. A title search is also necessary for obtaining title insurance, which many lenders require as part of the mortgage process.
Even if you don’t need it for your mortgage, title insurance is good to have to protect yourself in the long run. So, what does a title search look for, anyway?
1. Verification of ownership: First and foremost, it is important to know that the person selling the property has the right to sell it.
2. No hidden surprises: Buying a home is expensive enough; it’s important to make sure there are no hidden surprises that may come with your new home purchase, like outstanding debts registered against the property.
3. Restrictions: Easements, right-of-ways, restrictive covenants, and development agreements may be registered on the property’s title. Each has its own set of rules that the new property owner will need to know and understand.
4. Boundary and survey discrepancies: A title search pulls the property record of the property being purchased and sold as well as neighbouring lots. The search may reveal differences in the surveys of the respective properties.
5. Fraud prevention: In this age of modern technology, real estate fraud is more prevalent than ever. Protecting yourself and your property (or future property) starts with understanding its full legal standing.
A title search performed by your real estate lawyer aims to protect the homebuyer from encountering any hidden financial surprises related to the property title or its legal standing. Fraud, discrepancies, and ommissions are not uncommon in real estate. A title search is a means of protection and due diligence to ensure you are not taking on anything unexpected.
The Quinte Living® team with RE/MAX Quinte Ltd. takes steps to discover possible title issues prior to a purchase or sale. It is important to have an open conversation with your real estate agent about how performing due diligence ahead of time can help resolve unforeseen issues that may arise during a lawyer’s title search.
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