Title defects, also called clouds on a title, can complicate buying or selling a home in Ontario. In some cases, they could derail a transaction altogether, so it can help to know what some common clouds might be and how you can avoid the complications they can cause.
Common clouds to watch out for
Certain issues could invalidate a title, cost buyers money and cast doubt on ownership, so it can be crucial for parties to be aware of some of the common title issues they could discover.
- Liens: Claims against property can become your responsibility if you buy a house with a lien. Liens often come from loan defaults or unpaid bills to parties like contractors.
- Fraud: Parties that participate in actions like falsifying or forging deeds do so to gain ownership of property illegally. If someone engaged in this misconduct at any point in the property’s history, ownership could be in question.
- Easements and boundary disputes: A title for property that the seller cannot legally sell could create a defect. These can happen in cases where there are disputes between neighbours or easements in effect.
- Improper deed: Errors on a deed in the form of issues like inaccurate descriptions can also compromise property transfers.
- Probate issues: Transferring property when someone passes away can be complicated. During probate, the legal process many estates will go through, problems can arise if parties lose documents (like death certificates) or if there are disputes over property ownership.
Learning about title issues or defects can be upsetting, but uncovering them sooner rather than later is crucial. As soon as you discover a title cloud, you can take steps to clear it.
What do we do if the clouds roll in?
There are multiple ways you can resolve or prevent issues with title defects. One option is to secure title insurance to protect you from financial losses from the cloud. Quitclaim deeds, lawsuits and quiet title actions can also clear a title.
If you are buying a new home, you probably have a list of all the most important things you want in a house. Adding a clean title to your list can be wise for anyone hoping for a smooth transaction.