What the Heck is Title Insurance?

Title insurance is an insurance policy that protects you, the homeowner from problems related to the title to your home. Risks that are covered under title insurance include claims due to fraud (if person who sold it to you will be found guilt of fraud and therefore not a lawful owner of the property); work orders and liens (ex: if previous owner did not pay contractors); undischarged mortgages, zoning and setback non-compliance, survey irregularities, permit violations, fences, boundaries, tenancies, rights of way, certain easements and many others, but the most common one is probably utility bills unpaid by previous owner

      What Does Title Insurance Not Cover?

• Damages due to flooding, fire or sewer backup;
• General wear and tear of your home (e.g. replacing old windows, a leaky roof, or an old furnace)
• Theft (e.g. a burglar breaks into your home and steals your television); and
• Other losses or damages due to nontitle related issues.

     What are the Different Types of Title Insurance?     

     There are two main types of title insurance policies:

Owner’s policy – Protects the property owner from various title related losses that are listed in the insurance policy, for as long as the property is owned. An owner’s policy sets a maximum amount of coverage.

Lender’s policy – Protects the lender from losses in the event that the property’s mortgage is invalid or unenforceable. A lender’s policy usually provides coverage for the amount of the property’s mortgage.

        What type of properties can be covered?
Tile insurance is offered on all types of properties including single family residences, apartment buildings, mixed-use properties, agricultural properties, vacant land, warehouses, railways, office buildings, entertainment complexes, retail outlets, distribution centres and hotels. In fact, title insurance is even more important for commercial real estate transactions where typically the risks are greater and loan amounts larger.

      How long does the coverage last?

Residential title insurance coverage lasts as long as you own the property. Most residential title insurance policies extend coverage to your heirs through a will, to a spouse in the event of a divorce, or to children when the property is transferred from parents to children for nominal consideration.

Toronto Market Watch: September

Greater Toronto Area (GTA) REALTORS® reported 5,879 transactions through the Toronto MLS system in September 2012. The average selling price for these transactions was $503,662, representing an increase of more than 8.5% compared to last year.

The number of transactions was down by 21% in comparison to September 2011. However, it is important to note that there were two fewer working days in September 2012 compared to September 2011. The majority of transactions are entered on working days. On a per working day basis, sales were down by 12.5% year-over-year.

Condo prices continue to suffer, combine it the 3rd month of dropping sales (27% average this month) and you will see that market is adjusting itself in that area. Though 416 area condo apartments price increase was 8% vs. year ago; 905 are is at just 1% compared to last September. We hear from many lenders, including credit unions that they are no longer offering mortgages with less than 35% down on any apartment condos south of HWY 401. When it gets harder to get financing, you have less buyers and less sales. This could explain (on top of other reasons) the decline on condo market

Townhouses did surprisingly bad in both 416 and 905 area with only 6% price increase on average. Highest price increase was seen in semi-detached houses - 12% on average. 

“While sales have been lower due to stricter mortgage lending guidelines, we continue to see substantial competition between buyers. The months of inventory trend remains low from a historic perspective, which explains the strong price increases we are experiencing,” said Toronto Real Estate Board (TREB) President Ann Hannah.

“Barring a major change to the consensus economic outlook, home price growth is expected to continue through 2013. Based on inventory levels, price growth will be strongest for low-rise home types, including single-detached and semi-detached houses and town homes,” said TREB’s Senior Manager of Market Analysis, Jason Mercer.

Read full report

Is ‘Manhatannization’ of Toronto Really Here?

One of 5 Corners' partner in Real Estate - Nikolay Klyushkin posted and interesting article about developments in Toronto. Do you think Toronto will be a Northern Apple? Just look at all the new buildings planned for the next 10 years

This is not new that Toronto is building  more skyscrapers than any other city in North America.

The total number of condo buildings (high and low rises and skyscrapers) under construction is 184 according to Emporis, provider of building and construction data. And despite all talks and warnings of a Canadian real estate bubble, there are hundreds planned to be built.

Going through the multiple Internet forums I came across the artwork of this young 17 year old guy named named Cale Vanderveen who really impressed me with his vision and superb images of new developed Toronto city.

Check them out here and here are the guidelines:

• WHITE = the project has had preliminary renders, but no application has been submitted.
• RED = the project has submitted an application to the city
• GREEN = the project has been approved, but has yet to start construction
• YELLOW = the project is currently in sales
• BLUE = the project is currently under construction

Entertainment district:

View from DVP in 10 years:

Yorkville:

New skyline:

How to avoid or minimize penalty when breaking a mortgage

If you’re getting a new long-term mortgage,  odds are you will consider making changes before maturity. The majority of people will either:
•    Add money to their mortgage
•    Add a secured  line of credit
•    Refinance to get a better rate (which happens less frequently nowadays)
•    Increase the amortization
•    Port their mortgage to a new home, or
•    Discharge it outright.

Some of the above will require an early pre-payment charge (penalty). Even though  major banks have lower funding costs sometimes they charge more than twice of what a smaller lender would charge for the same term mortgage. Some times penalties could be tens of thousands of dollars and it's important to know about them regardless if property is your home or an investment.

Here are some questions to ask a lender about its penalty:

If I break the mortgage and stay with you, will you forgive a percentage of my penalty or apply unused prepayment privileges, to reduce my penalty? 
More lenders are doing this as competition grows.


If not, can I make a prepayment a few weeks before breaking my mortgage to lower the balance used to calculate my penalty? 
When determining a penalty, some lenders refuse to consider prepayments 30-90 days before you request to discharge.

Can I increase my mortgage without a penalty? 
This is important if you ever upgrade your property or need additional funds.


If I sell my property and port my mortgage to a new one, how long can I take to close on that new property and still avoid a penalty? 
Some lenders unreasonably require you to close your old and new home on the same day, others are willing to wait for up to a month.


Can I get out of my fixed mortgage early if I pay a penalty? 
Some “low frills” closed mortgages don’t let you out before maturity – no matter what – unless you sell your home. On a flexible mortgage on another hand, most of the times you only need to pay 3 months interest to break a mortgage.

Do you charge IRD (The IRD is a compensation charge that may apply if you pay off your mortgage prior to the maturity date, or pay the mortgage principal down beyond the amount of your prepayment privileges) penalties on your variable-rate mortgage, as opposed to the standard three-month interest? 
Despite being highly unorthodox, a few lenders actually do this and it can cost you.

How long will you honor your IRD penalty quote? 
This is relevant if you’re trying to discharge a fixed-rate mortgage while rates are dropping. Falling rates can increase your IRD penalty.

By March 5th, 2013 industry will go a step further by requiring banks to provide annual information that will help consumers calculate their penalty, written penalty statements upon request with clear calculation explanations, and access to exact prepayment penalty quotes by phone.