Title Insurance: The Who, What, How, When and Why
November 07, 2019
THE WHO
Whether you currently own, or plan to purchase a property, it is important to understand title insurance and how it can work for you.
THE WHAT
“Title” means you have legal ownership over a property. You get title to a property when the owner signs the transfer document over to you. Your title is then registered with the land registry office.
“Title insurance” is an insurance policy that protects residential or commercial property owners, and their lenders, against losses related to the property’s title or ownership.
Title insurance may provide protection from:
- Unknown title defects
- Existing liens against the property’s title
- Encroachment issues
- 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
Title insurance protects you throughout the duration of your ownership. However, you should always refer to the terms of your title insurance policy for the details of coverage and/or exclusions.
THE HOW
How much your policy will cost depends on the value of your property and the insurance company you choose. However, the fee, or premium, is only paid once at the time of purchase.
Title insurance can be purchased through your lawyer, a title insurance company or a broker.
THE WHEN
There are two types of title insurance policies: owner’s policies and lender’s policies. Owner’s policies protect the property owner and set a maximum amount of coverage. Lender’s policies protect a lender, such as your mortgage company, from losses if the property’s mortgage is invalid or unenforceable.
Both title insurance policies are usually purchased at the same time you buy your property. You can also purchase residential title insurance anytime after you purchase your home, but those policies are slightly different to the policies obtained at the time of purchase.
THE WHY
Title insurance is not required in Ontario in order to purchase a property. However, most lenders will require title insurance before they will fund a loan. The decision to purchase title insurance should be discussed with your lawyer to better understand the protection and determine if it’s the best option for you. It is important to keep in mind that title insurance does not replace legal advice when purchasing a property.
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