All about Title Insurance
What is “Title”?
“Title” is a legal term that means you have legal ownership of property. You obtain title to property when the owner signs the deed (transfer document) over to you.
Title is then registered in your name at the land registry office.
What is Title Insurance?
Title insurance is a onetime fee, that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership.
Although Title insurance is not a requirement in Ontario this is a discussion you should have with your lawyer, a title insurance company or insurance agent/broker, to fully
understand what type of protection title insurance can provide you,
Keep in mind that title insurance does not replace legal advice when purchasing property.
What Does Title Insurance Cover?
- 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
What Types of Residential Properties can be Insured?
- houses, condominiums, cottages, rental units, vacant land, co-op’s, leased properties, and rural properties Residential title insurance can provide:
Comprehensive coverage provides insurance coverage against losses related to the property’s title. It may also provide coverage for:
- your lawyer’s negligence or errors relating to title risks that are covered by your policy.
- Gap coverage – It insures you for the “gap” between the time your property purchase is finalized (home closing) and the time your title is registered in Ontario’s land registry system.
- Survey coverage – It may eliminate the need for a new uptodate survey of your property and is acceptable to most lenders as an alternative to a survey or Real Property Report (RPR). Title insurance does not provide compensation for nontitle related issues.
It is not a home warranty or home insurance policy, and will not provide compensation for:
- Damages due to flooding, fire or sewer backup;
- General wear and tear of your home (e.g. replacing old windows, a leaky roof, or an old furnace)
- Theft (e.g. a burglar breaks into your home and steals your television); and
- Other nontitle related issues.
What Types of Commercial Properties can be Insured?
- office buildings, industrial buildings, shopping centres, apartment buildings, rental units, warehouses, vacant commercial land, leased commercial properties
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 your policy. It may also cover most legal expenses related to restoring your property’s title.
What is “Title Fraud”?
Title fraud (or real estate title fraud) is a form of real estate fraud that harms individual homeowners and their lenders. Title fraud typically involves a fraudster using stolen personal information, or forged documents to transfer your home’s title to him/herself (or an accomplice), without your knowledge. The fraudster then gets a mortgage on your home and disappears with the money.