Title insurance appears on many Ontario real-estate closing discussions, but buyers are not always sure what it actually protects. It is insurance against certain losses connected to the title, or legal ownership, of real property.
It can be valuable protection, but it is important to understand both its purpose and its limitations.
What does “title” mean?
Title is the legal concept of ownership of the property. Ontario property-title information is maintained through the provincial land-registration system.
What is title insurance?
Title insurance is an insurance policy protecting property owners and/or lenders against specified title-related losses. According to Ontario’s Financial Services Regulatory Authority, title insurance is not legally required in Ontario.
Whether it is appropriate for a particular transaction should be discussed with your real-estate lawyer and, where necessary, the insurer or insurance professional.
What can title insurance cover?
Coverage depends on the policy, but Ontario’s regulator identifies examples that may include unknown title defects, certain existing liens, some encroachment issues, errors in surveys or public records and title fraud.
A policy is a contract. Buyers should rely on the actual wording of their policy rather than assuming every ownership or property problem is insured.
Does title insurance replace a lawyer?
No. Ontario’s insurance regulator specifically cautions that title insurance does not replace legal advice when purchasing property.
Your lawyer performs important closing work, including reviewing title and dealing with the transfer of ownership. Title insurance is an insurance product, not a substitute for that legal process.
Does title insurance replace a survey?
Not necessarily. Some policies may provide coverage for certain survey or encroachment issues, but a survey can provide information about the physical relationship between boundaries, buildings and other features. Whether you need additional investigation depends on the property and your intended use.
How is residential title insurance purchased?
Residential title insurance is commonly arranged during a home purchase, often through the buyer’s lawyer. Ontario’s regulator also notes that existing homeowners may be able to purchase coverage after the fact.
How long does coverage last?
Ontario’s regulator states that residential title-insurance coverage generally lasts for as long as you own the property, with many policies extending certain coverage to specified successors such as heirs or family members in particular circumstances. Check your actual policy for its terms.
What title insurance does not mean
Having title insurance should not be interpreted as permission to ignore known defects, zoning concerns, building permits, property condition or other due-diligence issues. Insurance coverage is subject to exclusions, exceptions, limits and the facts of each claim.
OntarioHomeIntel buyer checklist
- Ask your lawyer whether title insurance is recommended for your transaction.
- Understand whether the policy protects the owner, lender or both.
- Review the insured property description.
- Ask about important exclusions and exceptions.
- Do not assume title insurance replaces a survey, inspection or permit investigation.
- Keep your policy documents after closing.
What buyers should do before closing
- Ask your real-estate lawyer whether owner and lender title insurance will be arranged for the transaction.
- Review any known title, survey, encroachment or permit concerns before assuming the policy will cover them.
- Ask what important exclusions or exceptions apply to the specific property.
- Keep the final policy with your permanent closing documents after completion.
Bottom line
Title insurance is common in Ontario because it can protect against certain ownership-related risks that are difficult to eliminate completely during a real-estate transaction. But the protection comes from the specific policy you purchase. Your real-estate lawyer is the appropriate professional to explain how title insurance fits into your closing.
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This article provides general Ontario real-estate information and is not legal or insurance advice. Policy coverage varies by insurer and transaction.