It is an insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership.
It can also simplify the closing process for your lawyer, thereby saving you time and money
The word “title” is a legal term that means you have legal ownership of property. You obtain title to a property when the owner signs the deed (transfer document) over to you. All property title information is available on the government-run Land Registration system.
Title insurance is not a requirement in Ontario.
You should discuss whether you need title insurance with your lawyer, title insurance company or insurance agent/broker. They can help you fully understand what type of protection title insurance can provide. Then 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.
For a one-time fee, called a premium, a title insurance policy may provide protection from such losses as:
- Unknown title defects that impact your ownership of the property
- Existing liens against the property’s title, such as unpaid debts secured against the property by a previous owner, including:
- Utility bills
- Property taxes
- Condominium charges
- Encroachment issues (e.g. a structure on your property that encroaches on your neighbour’s property)
- Errors in surveys and public records
- Other title-related issues that may affect your ability to sell, mortgage, or lease your property in the future
- Title fraud
Residential title insurance is usually obtained when you buy your home, but it can also be purchased after the fact. Policies for existing homeowners are slightly different than policies for newly purchased properties.
You can purchase residential title insurance through your lawyer or title insurance company, or you can contact an insurance agent/broker.
View a list of insurance companies licensed to sell title insurance in Ontario.
The cost of residential 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.
How long does the coverage last?
Residential title insurance coverage lasts as long as you own the property. As well, most residential title insurance policies extend coverage to:
- Your heirs through a will
- A spouse in the event of a divorce
- Children, if the parents transfer the property to them
When purchasing residential title insurance, make sure:
- You insure your property for its full value
- Your policy’s effective date is the same as your property’s closing date. (for policies obtained at the time of purchase)
- You carefully review your policy to ensure that it correctly describes all of the property you are purchasing
- You understand what title-related losses your policy will cover
- You know what your policy excludes or does not cover
A lawyer can provide legal advice to help you make an informed decision about title insurance and other aspects of the transaction.
As well, title insurance companies and insurance agents/brokers should meet best practice standards that include:
- Providing information to clients on all available options
- Supplying full details for all matters related to the title insurance transaction
- Ensuring that the recommended product meets the client’s needs
1. Double-check your insurance policy to verify that your policy covers the title-related problem.
2. Submit your claim as soon as possible. Ask your title insurance company or refer to your policy to find out when claims must be submitted.
3. Make your claim in writing. Write a detailed letter to the title insurance company. Include information on the losses you have experienced due to a title-related problem. Make sure you include your policy number, contact information and any relevant documents related to your claim.
You may want to contact your title insurance company or insurance agent/broker to obtain information on its claims handling process.
4. Keep a copy of your claim for your records.
It may take time for your claim will be reviewed by the insurance company. They may have additional questions to ensure you qualify for coverage under your policy. Have your own copy of the claim with you when you speak to the insurance company.
When purchasing title insurance, always read the policy and ask questions to fully understand your coverage.
You also need to be aware of possible exclusions, which may include:
- Known title defects (known to you before you purchased your property)
- Environmental hazards (e.g. soil contamination)
- Native land claims
- Problems only discovered by a new survey or inspection of your property. For example, the property is smaller than originally thought
- Issues that were not listed in public records, such as unrecorded liens and encroachments
- Zoning bylaw violations from changes, renovations or additions to your property or land
- Title insurance does not provide compensation for nontitle-related issues
Do I need extended title insurance coverage?
For an additional fee, some title insurance companies may offer protection from additional risks that a standard title insurance policy may not cover:
- Identity theft
- Certain known title defects
Speak to your lawyer or insurance agent/broker to determine if you require extended or additional title insurance coverage.
There are two main types of title insurance policies:
Owner’s Policy: Protects you from various title-related losses listed in the insurance policy. An owner’s policy sets a maximum amount of coverage.
Lender’s Policy: Protects the lender from losses in the event that the property’s mortgage is invalid or unenforceable. A lender’s policy usually provides coverage for the amount of the property’s mortgage.
You can purchase title insurance for both residential and commercial properties.
Types of residential title insurance include:
- Policies for new homeowners
- Policies for existing homeowners
- Policies for lenders in a residential mortgage
Types of commercial title insurance include:
- Policies for individuals purchasing commercial properties
- Policies for lenders in a commercial mortgage
Residential title insurance policies can insure:
- Rental units
- Vacant land
- Leased properties
- Rural properties
Commercial title insurance policies can insure:
- Office buildings
- Industrial buildings
- Shopping centres
- Apartment buildings
- Rental units
- Vacant commercial land
- Leased commercial properties
If you are purchasing a house or condominium, you may want to consider purchasing residential title insurance. You may also want to consider it if you currently own a property.
Residential title insurance can provide:
Comprehensive coverage: This coverage protects you from losses related to the property’s title. It may also provide coverage for any risks to your title due to a lawyer’s negligence or error.
Gap coverage: It insures you for the “gap” between the time your property purchase finalizes and registration is complete 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).
Legal coverage: This coverage will pay for most legal expenses involved in defending your home’s title.
Title fraud (or real estate title fraud) is a form of real estate fraud that harms individual homeowners and their lenders.
It typically involves a fraudster using stolen personal information or forged documents to transfer your home’s title to him/herself without your knowledge. The fraudster then uses the title to secure a mortgage on your home and disappears with the money.
If you are a victim of title fraud, you may be able to receive compensation for your losses. You can submit a claim through the government’s Land Titles Assurance Fund (LTAF). For more information on the Land Titles Assurance Fund, visit www.ontario.ca/serviceontario and search for Land Titles Assurance Fund.