Seven reasons to order a title report
1. The Equity Loan.
Do you have a credit line with a bank? It may be secured with a mortgage registered against your home.
2. The Collateral Mortgage.
When you take out a mortgage with a bank, the bank will sometimes require a mortgage against your home for its full value , even if the amount of the actual mortgage loan is much less.
For example, if the purchase price of your home is $950,000.00 and you borrow $300,000.00, the bank might register a mortgage of $950,000.00 on your title.
It may be easier to borrow more money from the bank later with this arrangement. However, consider the following:
(a) You have now “tied up” all of your equity and you will be unable to use the equity in your home to borrow from any other lender. But if you try to borrow from the bank that holds the mortgage you may not qualify for a further loan.
(b) If you have credit card debt with the same bank which you thought was unsecured debt, the bank can use the collateral mortgage against your house for all debts owed to the bank, even your credit card.
(c) If your credit is being rated, perhaps to qualify for a car purchase, or to guarantee your child’s student loan, the credit rating agency may see a large debt of $950,000.00 against your house. They may not know how much is actual debt and how much is unused equity.
3. Canada Revenue Agency.
If you owe taxes, the CRA can lien any property owned by the taxpayer.
This lien may appear as a title registration or as a sheriff’s writ.
Once this lien is in place, you will be unable to sell or refinance your house unless the tax arrears are paid in full, according to CRA’s calculations.
If you dispute the amount, the only way to get the lien off is either to have a court hearing, (which could take years and you might lose) or to pay it off in full and then litigate your dispute.
4. Notice of Security Interest.
If you have ever purchased a furnace, central air conditioning, or other equipment on an installment plan, there is probably a “Notice of Security Interest” registered against your title.
When you later apply to your bank for a secured loan to pay for a trip, or college tuition, you may find out that you can’t get the loan until your security interest is paid off, and this may use up a large part of the loan you were hoping to take out.
5. Construction Liens.
If you hired a contractor to do any work on your property, and you did not pay the invoice in full, the contractor may have a right to register a lien against your title.
Such a lien may be followed by a court claim. If this is the case you must respond or the contractor will obtain judgment for the full amount plus his costs.
6. The "forgotten" discharge.
(a) If you have ever re-financed your mortgage, a new mortgage is registered on your title, and the old mortgage is supposed to be removed by the bank.
It sometimes happens that your bank overlooks this step. This could result in your discovering an obsolete mortgage on your title 5 or 10 years after it should have been removed. Unfortunately, by that time, the bank has closed its file, you have discarded your old information, and it will take a lot of investigation work to clear your title.
This could be costly and could interfere with a sale or loan you were trying to close.
(b) A similar scenario can occur when you buy a property.
Bank discharges are often not available on closing so if you buy a property subject to an existing mortgage, the Seller’s lawyer will provide your lawyer with a written promise called an “Undertaking” to remove the Seller’s old mortgage after a period of time, usually 90 days.
Due to human error, these undertakings are sometimes forgotten and you might still have your Seller’s old mortgage on your title.
7. The Sheriff's Writ
(a) If you were ever sued and lost in court, your opponent may have been granted the right to file a “Sheriff’s Writ” against your name for money owing.
This writ is filed with the Land Registry Office and will give your opponent the right to put your property up for sale after a period of time if the judgment is not paid.
(b) It is also possible that you were served with a court claim but you did not respond.
In that case, your opponent can obtain a “default judgment” and also file the writ described above.
(c) Please note, for a report of sheriff’s writs, you’ll need to order the sheriff’s writ search found on the Paypal dropdown menu. If writs are filed, there is an added charge of $25 for details.
