What is title insurance and why you're required to have it?

What does “title” mean?

If you hold title to a property, this means you have legal ownership. When you buy a home, you legally obtain title when the owner signs the deed of the home over to you during the purchase transaction. A qualified lawyer with access to the Ontario Land Registration System must then officially transfer the title to you, the purchaser of the home.

What is title insurance?

Title insurance is an insurance policy that protects property owners and their lenders against losses related to the property’s title (in other words, its ownership). This policy provides protection even in situations where the defects existed prior to the home being purchased. It also continues to cover you for as long as you own the home.

Title defects…so what?

A title defect is a problem with the title which prevents free and clear ownership of the home. A defect can actually prevent the owner from selling the home (even though they own it). There are many types of defects including: 

  • Existing liens against the property
  • Encroachments (from neighbouring properties)
  • Rights of way
  • Title fraud
  • Errors in surveys and public records
  • Violations of municipal zoning by-laws
  • Setback violations
  • Realty tax arrears
  • Existing work orders
  • Lack of legal access to the property
  • Outstanding municipal utility charges