TITLE INSURANCE VS REAL PROPERTY REPORTS

Title insurance is a valuable tool and very much worth discussing with a purchaser. As this chapter deals with the sale of real property, only issues as they affect a seller shall be mentioned. A title insurance policy guarantees (with specific limitations as stated in the policy) your title to the property including such things as, encroachment issues of improvements on the land, title fraud, and unknown breaches of local land use bylaws.
A Real Property Report will show if there are any easements for utilities or rights-of-way on the property, and whether fences, trees, buildings, gardens, embankments, driveways, walkways, swimming pools, house additions and other property improvements are actually on your property — or if anything encroaches from your neighbour’s property onto yours.
Since title insurance was introduced in Canada in the early 1990s, it has been marketed as an inexpensive replacement for a property survey. Arguably purchasers put themselves at risk by not getting an up-to-date survey, even if they have title insurance. This is why my advise to purchasers is to not accept title insurance in lieu of a current RPR with compliance. Even if there are no issues with the property, there is still the issue that the buyers will need to pay for title insurance every tie the refinance their home and will certainly need to pay for a new RPR when they sell the home.
Title insurance is used most of the time in the United States because of the continued poor condition of deed registry systems in many states and because of the inconsistent manner in which American surveyors are licensed and regulated from state to state.
In Alberta, the Torrens system allowed for the orderly opening of land for development, and has provided security of tenure through reliable documentation of land ownership and a provincial guarantee of an interest in land.
As a seller there is every incentive to using title insurance in lieu of a RPR if a new one is required as it has a lower cost and passes off any obligation if an unknown problem is discovered after possession. If a purchaser agrees to this change to the standard purchase contract, then it is imperative to make changes to the contract that covers off all the RPR issues as well as encroachments and land use sections. Without these further changes, if a defect is discovered (ie that a new garage sits on City property) then the seller may still be liable.