Title Insurance Overview

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When you purchase real estate, it is crucial that you obtain a property with clear ownership or “good title.” You obtain title to property when the owner signs the deed (transfer document) over to you. Title is then registered in the government’s land registration system. Title insurance protects property owners against losses related to the title of their property and protects them from problems that may arise after they move in from the results of events that occurred in the past.

What Title Insurance Covers

Title insurance may provide protection from such losses as:

  • Unknown title defects (issues that prevent you from having clear ownership of the property);
  • Existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property);
  • Encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property);
  • Renovations completed prior to your purchase that are not in compliance with building regulations or may not have come to light in a typical home inspection;
  • Title fraud (e.g. typically involves a person using stolen personal information, or forged documents to transfer your home’s title to him/herself, or an accomplice, without your knowledge. They then get a mortgage on your home and disappear with the money.);
  • Errors in surveys and public records; and
  • Other title-related issues that can affect your ability to sell, mortgage, or lease your property in the future.

What Title Insurance Does Not Cover

You need to carefully review your title insurance policy, as it may include additional exclusions and exceptions that are specific to your property, including:

  • Known title defects (that were revealed to you before you purchased your property);
  • Environmental hazards (e.g. soil contamination);
  • Native land claims;
  • Problems that would only be discovered by a new survey or inspection of your property (e.g. the property is smaller than originally thought);
  • Matters that are not listed in public records (e.g. unrecorded liens and encroachments); and
  • Zoning by-law violations from changes, renovations or additions to your property or land that you are responsible for creating.

Title insurance does not provide compensation for non-title related issues. It is not a home warranty or home insurance policy, and will not provide compensation for issues such as damages due to flooding, fire or sewer backup, general wear and tear of your home, or theft.

Cost of Coverage

The cost of title insurance varies based on the value of your property, and the insurance company you choose. You will need to pay a one-time fee, called a premium.

Length of Coverage

Unlike other insurance, title insurance has no termination date and no time limit for filing claims. Your title insurance policy will protect you as long as you own your property, and will cover losses up to the maximum coverage set out in the policy.

Purchasing Tips

Title insurance is not a requirement in Ontario. The decision on whether you should purchase title insurance should be discussed with your lawyer, title insurance company or insurance agent/broker, to fully understand what type of protection title insurance can provide you, and to determine if other options exist. Once you have all the facts, you can make an informed decision based on your specific situation and needs. It is important to:

  • Insure your property for its full value;
  • Ensure that your policy’s effective date is the same as your property’s closing date (for policies obtained at the time a property is purchased);
  • Carefully review your policy to ensure that it correctly describes all of the property you are purchasing;
  • Ensure you understand what title-related losses your policy will cover; and
  • Know what your policy excludes or does not cover.

Remember, title insurance does not replace legal advice when purchasing property.