what is title insurance

| Homeowners

You may have heard the horror stories about fraudsters posing as homeowners to sell their properties or secure mortgages against their homes. These nightmare situations are on the rise thanks to technology making it easier to steal identities. But fear not, home buyers! Known as “title fraud,” homeowners have one way of protecting themselves through a handy little policy called “title insurance.”

So, what exactly is title insurance, or even a title for that matter? Here’s our Title Insurance 101 quick study to explain what it is and why you need it.

What is a Title on a Home?

A title on a home is legal proof of ownership for land and its structures. When you purchase a home, your lawyer runs a “title search” to ensure the owners have a legal right to sell you the home and that public records are clear of any documents that might hinder the sale, aka “title defects.” Defects might include unresolved legal claims, outstanding loans (liens), mortgage issues, property line disputes, and potential issues related to complex ownership situations such as joint tenancy. When sellers sign the transfer documents, or “deed” to the property, you gain title to the home.

Your real estate lawyer is an important part of your home-buying team. Learn more about the role of real estate lawyers and other professionals you need when buying a home: 

What is Title Insurance in Ontario?

Title Insurance covers the condition of the title or ownership of the property as proof you are the rightful owner of the home/land. The insurance protects your ownership or title against losses resulting from title defects and fraud.

Unfortunately, fraud is a very real thing to be concerned about. Learn how to spot it by reading: How to Protect Yourself Against Real Estate Fraud in Toronto

Where To Buy Title Insurance In Ontario

You buy title insurance through your real estate lawyer as a one-time fee prior to closing. You can also purchase a more robust title insurance policy after the fact through a title company.

How Much is Title Insurance in Ontario?

As with all insurance policies, the cost of title insurance in Ontario varies based on the policy type, property type, and property value. Typically costs range from $200 to $500 but can be as high as $1,500.

Learn more about the other costs associated with buying a home. Read these posts next:

What Does Title Insurance Cover in Ontario?

An owner’s title insurance policy typically covers the following defects/issues prior to and after closing:

  • Survey errors related to incorrect property lines or illegibility of survey
  • Encroachments caused by additions, driveways, fences, etc. that infringe on a neighbour’s land
  • Problems with municipal zoning bylaws
  • Someone else owning interest in your title
  • Existing work orders
  • Invalidity of the mortgage on the title
  • Liens (outstanding loans against the property)
  • Easements (other than usual easements for utilities, etc.)
  • Problems with subdivision, development and other agreements
  • Fraud or forgery
  • Solicitor error, omission or fraud
  • Realty tax arrears
  • Damage for the amount of the policy based on the initial property price and increased coverage for inflation and rising property value over time
  • Payment of legal fees to address title issues

Buying a condo is a different animal too. If you’re buying a condo, you’ll need to know: What is a Status Certificate, and Why Do I Need One?

Is Title Insurance Mandatory In Ontario?

No, title insurance is not mandatory for owners, BUT lenders do require mortgage holders to obtain a lender’s title insurance policy.

How Do I Know If I Have Title Insurance?

Good question! You can check your closing documents, ask your real estate lawyer, or reach out to a title company that can check for you.

How Long Does Title Insurance Last?

Your title insurance starts at the time the policy is issued and covers your title for as long as you own the home. Even if you only have a lender’s policy, once you have a zero-mortgage balance, the insurance lasts until you register a mortgage discharge.

How to Protect Yourself Against Title Fraud

The last thing we want to do is scare you with all this talk about title fraud. Feel safe knowing there are ways to protect yourself and reduce the risks of it happening to you. You probably know by now that unsolicited e-mails, text messages, telephone calls or mail asking you for personal or financial information is not normal banking, legal, or real estate procedure, so NEVER click anything or share your information over the phone! Here are a few more tips:

  • Out of sight is out of mind, so check your credit reports, bank and credit card statements and report any irregularities
  • ALWAYS shred personal and financial documents before putting them in the garbage
  • Pick up your mail as soon as possible to reduce the risk of mail theft
  • Notify the post office, financial institutions, and service providers when you move
  • And, of course, get title insurance

Is Title Insurance Worth It?

The way we see it, the increased risk for title fraud makes the small one-time fee for title insurance worth it.

Are you interested in learning more about Title Insurance for your home? Then give us a call at 416-291-7372 or email us at hello@christinecowern.com. We’re happy to help!