Title Insurance vs. Real Property Report Making the Right Choice for Home Buyers

Title Insurance vs. Real Property Report Making the Right Choice for Home Buyers

When it comes to purchasing real estate, there are several essential considerations that every buyer must address. One of the crucial elements in the process is the requirement for a Real Property Report (RPR) with evidence of compliance with municipal zoning laws and bylaws, typically applicable to houses or bare land condominiums. In certain situations, however, sellers may not have a current RPR with compliance, leading them to offer an alternative solution: purchasing a Title Insurance Policy for the buyer. But the question remains, should a buyer accept Title Insurance in lieu of an RPR? Let’s explore the factors involved in making this decision. Firstly, it’s essential to understand the reasons why sellers might prefer offering Title Insurance:

Cost-effectiveness: Buying title insurance for the buyer may be less expensive than obtaining a new RPR with compliance. Concealing known issues: Sellers may be aware of issues that could be revealed in an RPR, leading them to avoid providing one and opting for title insurance instead (note that this may limit the insurance coverage). Time constraints: In some cases, there might not be enough time to prepare a Real Property Report with compliance before the Closing Date, prompting sellers to choose title insurance as a quicker alternative. On the other hand, buyers have valid reasons to prefer receiving a Real Property Report with compliance:

Clarity on property status: An RPR provides valuable information about the property, such as the presence of any encroachments or permit-related matters. Seller responsibility: If the RPR reveals any issues, it becomes the seller’s responsibility to address them according to the purchase and sale agreement. Limited coverage: Title insurance might not cover certain issues or may lead to claim denials, especially if the buyer was aware of deficiencies beforehand. Future selling considerations: If buyers opt for title insurance and later decide to sell the property, they might have to provide a Real Property Report with compliance or negotiate with potential buyers who insist on having one.

While these points present a compelling case for choosing an RPR, there are scenarios where accepting Title Insurance might be more beneficial: Planned property changes: If the buyer intends to tear down the existing property and build anew, title insurance can offer coverage for losses related to compliance issues that would have been revealed by an RPR. Potential errors: Even with an RPR, there may be errors discovered later, and title insurance can cover the costs of correcting such errors. Seller requirement: Some sellers might make title insurance a condition for selling the property.

Ideally, the best approach would be to combine both options – obtaining a Real Property Report with compliance and securing title insurance. This comprehensive approach ensures buyers have a full understanding of the property’s status through the RPR while gaining additional protection from unforeseen issues via title insurance. It is worth noting that title insurance covers aspects beyond what an RPR reveals, including municipal issues like outstanding work orders, permits, tax arrears, builder’s liens, and fraud. Therefore, even if the seller provides an RPR, getting title insurance is highly recommended to safeguard against potential uncovered losses. The Verdict The decision between accepting Title Insurance or insisting on a Real Property Report with compliance depends on the unique circumstances of each real estate transaction. Buyers must carefully weigh the advantages and disadvantages of both options, considering their future plans for the property, potential risks, and financial constraints.

Ultimately, combining both approaches offers the most comprehensive protection, ensuring buyers have peace of mind while making one of the most significant investments of their lives. Core Geomatics can help you with accurate and reliable land surveying and mapping services, ensuring precise data for your real estate ventures. Their expertise in geospatial technology empowers you to make informed decisions and navigate projects with confidence.