Do I Need Title Insurance Buying a House in Newfoundland and Labrador?

At closing, a first-time buyer is often asked whether they want title insurance. It can feel like one more cost on top of everything else, and it is hard to judge when nobody has explained what it is for.

This article explains the basic idea, what the Newfoundland and Labrador registry system does and does not do, and which questions to ask before you say yes or no. It is general information, not advice on your purchase.

This article covers the law of Newfoundland and Labrador.

What title insurance is, in plain words

Title insurance is a policy that is meant to respond to certain problems with who owns a property or what claims are attached to it. What it covers depends on the wording of the specific policy, including its exclusions. That is why the policy itself matters more than the sales pitch.

It is separate from home insurance, which deals with damage to the house. It is also separate from the government registration charge you pay to register your deed.

What the registry does and does not do

Newfoundland and Labrador uses a registry of deeds and notices. Registration gives notice to anyone who later claims an interest in the land. An instrument is treated as registered when it is delivered, if the registrar finds it compliant, and that fixes the time of registration and priority.

It is not a guarantee of title. The Registration of Deeds Act, 2009 does not say the registry guarantees title, and it is a system that provides notice and priority. The registrar can also refuse to register an instrument, for example where the property description is missing or illegible.

Searching is not simple either. Registry staff do not do searches for clients, and title searching in the province is complicated, so a professional search firm or a lawyer is recommended. A search may also show only a notice of mortgage rather than its full terms.

Is title insurance required?

Whether you need a policy is usually a practical question, not one answered in a single provincial rule. Your lender may set conditions in its instructions to your lawyer, and your lawyer can tell you what your lender asks for and what the choices are. Ask about this before closing day so you are not deciding under pressure.

Your lawyer will probably be involved in any case. Preparing a deed or mortgage that must be registered in a public office counts as the practice of law. The Registry of Deeds also says it is advisable to engage a lawyer to prepare the documents to ensure compliance and facilitate registration.

Protections you may already have

• Registration protects your position. An instrument that is not registered can be treated as void against a later purchaser or mortgagee for value who registers first.
• Seller's covenants. On a conveyance for valuable consideration other than a mortgage, the seller is treated as promising that they have full power to convey as beneficial owner and that the property is free of encumbrances, except those expressly accepted.
• A professional search. A lawyer or search firm can search the registry, which holds property descriptions, liens and consideration paid for registered documents.
• Online and certified records. Registered instruments can be searched online by a licensed user, and certified copies are available on request.

These protections have limits. A promise from a seller is only as useful as your ability to pursue the seller later. A registry search shows what has been registered, not necessarily every problem with a property. A policy may or may not fill those gaps, depending on its terms.

What to do next

Raise the question with your lawyer well before closing. These questions help you compare the cost of a policy with what it adds.

• Does my lender require title insurance, or accept it in place of other steps?
• What exactly does the policy cover, and what are its exclusions?
• What is the one-time premium, and is it separate from the registration charge?
• Does it cover problems that arise after closing, or only ones that existed before?
• How would I make a claim, and who would I contact?

Keep the registration charge in mind when budgeting. It is calculated under the Services Charges Act and is $100 on a value up to $500, plus $0.40 for each additional $100 or part of $100 above that. The Registry of Deeds also provides an online fee calculator. A lawyer or accountant can confirm which costs and tax credits apply to your purchase.

Frequently asked questions