Title Insurance
Related Links: Frequently Asked Questions
Title insurance is an insurance policy that protects residential or commercial property owners and their lenders against losses related to defects (not seen or investigated) in the property's owner's title. Recently it has become cost efficient to purchase title insurance by the real estate lawyer
Why you might need Title Insurance:
Title insurance is not a requirement in Ontario. The Law Society of Upper Canada requires lawyers to inform clients of alternative methods of ensuring that their title is free from defects that would affect the owners enjoyment of the purchased property. Another alternative to Title Insurance is
The decision on whether or not 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 get all the facts, you can
make an informed decision based on your specific situation and needs. It is important to keep in mind that title insurance does not replace legal advice when purchasing property.
What Does Title Insurance Cover?
For a one-time fee, called a premium, a title insurance policy may provide protection from such losses as:
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; and Other title-related issues that can affect your ability to sell, mortgage, or lease your property in the future.
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. It may also cover most legal expenses related to restoring your property's title.
What Does Title Insurance Not Cover?
When purchasing title insurance, it is important to read the policy and ask questions to be aware of the coverage that is provided. You also need to be aware of possible exclusions, which may include:
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 bylaw violations from changes, renovations or additions to your property or land that you are responsible for creating. You need to carefully review your title insurance policy, as it may include additional exclusions and exceptions that are specific to your property
