title insurance?

[Cris]

Hello all:

Does anyone know whether title insurance would cover a purchase of a property under tax sale upon which it is later found to have a crown lien?  That is, would they pay off the crown lien as part of the coverage if such a defect were found post-purchase?

[Rob]

This is a very good question.

My understanding from speaking to a few people in the industry is title insurance wouldn't be available.  But I'd love to hear from other people in the industry or with knowledge of this, because if title insurance was available, I think it would make these properties so much more appealing and so much less risky.

[Cris]

Well, after digging around a little bit I was able to get an answer from First Canadian Title, one of the most popular title insurance companies.  If the crown lien is not registered prior to the sale date, then title insurance does cover this as it would then be considered a defect.  Title Insurance companies search title prior to finalizing their coverage, so if they don't find anything when they do their search, then you're covered should one be registered erroneously later.