Title insurance is not the most exciting thing to spend your money on, but it is an integral part of buying a house and most real estate lawyers (and virtually all mortgage companies) want it as part of every deal. Although title insurance is optional in Ontario, your lender will require it for you to receive your mortgage.
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.
What are the benefits of title insurance?
Title insurance protects the owner from:
- Unknown title defects (title 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)
- Title fraud
- Errors in surveys and public records
- Other title related issues that can affect your ability to sell, mortgage, or lease your property in the future.
How much does title insurance cost?
Like all insurance, title insurance premiums are based on the value of the property. This is a one-time fee, and you are covered throughout the duration that you own your property.
What coverage does title insurance provide?
- Comprehensive coverage – It provides comprehensive insurance coverage against losses related to the property’s title. It may also provide coverage for your lawyer’s negligence or errors relating to title risks that are covered by your policy.
- Gap coverage – It insures you for the “gap” between the time your property purchase is finalized (home closing) and the time your title is registered in Ontario’s land registration system.
- Survey coverage – It may eliminate the need for a new up-to-date survey of your property. It is acceptable to most lenders as an alternative to a survey or Real Property Report (RPR).
What does title insurance not cover?
You also need to be aware of possible exclusions on your title insurance policy.
- 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)
- Zoning bylaw violations from changes, renovations or additions to your property or land that you are responsible for creating.
Your title insurance policy might exclude specific things that are unique to your property. Your real estate lawyer can provide the specific details to you.
Title insurance does not protect against non-title related issues. It is not a home insurance policy or a type of home warranty.
The Financial Services Commission on Ontario has provided information on title insurance. You can read the document here.
If you have questions about title insurance, we have the answers. We have been advising individuals and families for more than 30 years.
To learn more about how we can help you, please contact us. We will be happy to help.
This article is intended as an informative piece about the subject. It should not be taken as legal advice. We recommend you connect with a real estate lawyer about your specific legal issue.