A one-time insurance policy that protects property owners and lenders against financial loss from defects in a property's title, including fraud, forgery, liens, encroachments, and zoning violations that existed before the policy was issued. Unlike most insurance that covers future events, title insurance covers risks that already exist but may not yet be known. Policies are available for both owners and lenders, and coverage lasts as long as you own the property.
Why It Matters
Title insurance is strongly recommended and often required by lenders in Ontario. For a one-time premium of $300 to $500, it protects against title fraud (which is a growing concern in the GTA), unknown liens from previous owners, survey defects, and building code violations by past owners. Without it, resolving a title dispute can cost tens of thousands in legal fees and potentially threaten your ownership of the property.
Real-World Example
Five years after purchasing your detached home in Markham, you discover that the previous owner built a deck that extends one metre past the property line onto municipal land. The city issues a notice requiring removal. Your title insurance policy covers the cost of removing and rebuilding the deck within your property boundaries, totalling $8,500, minus your deductible. Without title insurance, you would have borne the full cost yourself, plus any legal fees if you tried to pursue the previous owner.
Ontario & GTA Context
Title fraud is a particular concern in the GTA, where rising property values make homes attractive targets for criminals who forge ownership documents to take out fraudulent mortgages. The Ontario government introduced the Land Titles Assurance Fund as a backstop, but title insurance provides faster and more comprehensive protection. Ontario real estate lawyers are required to verify identity and report suspicious transactions, but title insurance adds an extra layer of security that protects you even if fraud is not caught during the transaction.
How It Works in Practice
Ensure your lawyer obtains both an owner's policy and a lender's policy at closing. The owner's policy protects your equity, while the lender's policy protects the mortgage. Review the policy schedule of exclusions to understand what is not covered, such as known defects disclosed before purchase or environmental contamination. Keep your policy documents accessible -- you may need them years after closing.
Common Questions
What is the difference between owner's and lender's title insurance?▾
Does title insurance cover title fraud in Ontario?▾
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