In a word no! Title insurance is no substitute for a survey.
It seems to have become somewhat of a common practice in the last few years for newer inexperienced real estate agents to advise clients against the expense of a survey, along with the recommendation to purchase title insurance as a way of safeguarding against any problems that may arise with the property.
And at least one title insurance provider has stated in the past that "title insurance diminishes the need for an up to date survey on most properties".
What is Title Insurance
Unlike other forms of insurance that insure you against things that may happen in the future, title insurance protects you against matters that happened in the past. Title insurance will protect you from any loss resulting from title defects that would have been revealed with an up to date survey. It also protects you against fraud and forgery related to title of the property.
What is a Survey?
A survey is a line drawing of a parcel of land showing the measurements, corners and boundaries of the property. They are prepared by a licensed Ontario Land Surveyor who will take careful and precise measurements at the site and then compare them with the registered title of the property. Surveys will show the building on the property as well as any improvements such as fences, decks, pools etc. Any easements and or rights of way in favour of neighboring properties or utilities will also be noted.
Surveys are usually requested from the seller at the offer stage on a property. If it is an up to date survey it could reveal potential problems up front before you close the deal allowing you time to address and remedy the issues.
Title insurance is usually purchased on the day of closing and will not disclose anything about the property.
If, as stated earlier title insurance will protect you from any loss resulting from title defects that would have been revealed with an up to date survey, why do you need one?
Title insurance like any other form of insurance contains exclusions in the policy. Most title insurance providers will not cover problems arising from fences or retaining walls encroaching on a neighboring property. As well as potential legal costs you will then have the expense and hassle of moving an encroaching fence or retaining wall.
Costs
Title insurance usually costs in the area of a couple of hundred dollars, while a survey will be somewhere in between $800-$1000 these days.
If the seller does not have a survey and is reluctant to pay for a new one your buyers' agent can sometimes, if all else fails, negotiate to split the cost between buyer and seller.
Yes, title insurance is valuable protection, but it is no substitute for a survey.
If you are a first time buyer, do you really want to take the chance that any hidden potential title defects on your new dream house will not be covered by a title insurance company?
John Lavin is a full time realtor with 24 years experience helping buyers and sellers of homes, condominiums and investment properties in Mississauga and Toronto, Oakville on & Brampton. If you are planning on buying or selling real estate please visit www.john-lavin.com
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