Title Insurance in Ontario: Protecting Your Property Investment

Are you buying a home in Canada? If so, title insurance is a must-have. Not only do most mortgage lenders require it, but it’s also the sensible thing to do when buying a home, even if it wasn’t mandatory with lenders. Let’s look at what title insurance is, what it does and doesn’t protect you against, the types of title insurance policies available and the kind of policies offered.

The definition of “title insurance”

Title insurance is insurance that specifically protects you as the homeowner from losses from your property’s ownership or title. There are two main types of title insurance. There’s title insurance to protect the homeowner and title insurance to protect your mortgage lender from losses (more on that in a section below).

What does title insurance protect you against?

Title insurance protects the homeowner from any number of situations related to the title and ownership of your property.

Defects

Sometimes when you buy a property you might not be aware that there are issues or defects related to the property’s title. This could stop you from having clear ownership of the home you purchased. Title insurance can help protect you in this instance.

Liens

Another instance where title insurance could protect you is if there are any liens against the title of the property. Of course, the liens must be from a previous homeowner. You can’t just choose not to pay a contractor and use the title insurance to get out of it.

For example, it’s not unheard of for the previous homeowner to have mortgages, utilities or property taxes that aren’t fully paid. Unless that’s fully taken care of, these parties could go after you for the money owed when you become the owner of the property. Thankfully title insurance can protect you in those instances.

Encroachment

Fences are a common topic of disagreement between neighbours. Imagine your neighbour does a survey and finds out that your fence is built on their property. Maybe your garage is even built on their property. This could get pretty messy and costly from a legal perspective. Again, title insurance can help you in situations like this involving encroachment.

Fraud

With the prevalence of computers these days, title fraud is a growing issue. Imagine someone fraudulently obtains a mortgage on your property and skips town with the money. Sadly, there are fraudsters out there who will steal your personal information and use forged documents to transfer the title of your home to themselves or someone else. This is a homeowner’s worst nightmare.

Errors

It’s not unheard of for there to be an error in public records or surveys. Sometimes there may be an issue with the title of your property that even stops you from selling it. Title insurance can once again come to the rescue.

How much is title insurance and how long does it remain in effect?

The price of title insurance depends on several factors. It mainly depends on the insurance company you choose and your property’s value. The one-time premium is then calculated based on this.

The good news is that once you pay that one-time fee, you get full protection from title insurance for as long as you’re the owner of the property (in most cases). Even if you pass away, your spouse or children may still receive full protection from the title insurance you originally purchased. What a great bargain!

This article is the shortened version of an article originally published on Hardbacon.ca by Arthur Dubois under the title "The Ultimate Guide to Title Insurance in Canada".