Everything You Need to Know About Title Insurance in Ontario
Learn about the importance of Title Insurance in Ontario, the types of coverage available and the major providers in the industry. You can learn more about title insurance and make an informed decision:
What is Title Insurance
Title insurance was introduced in the 1990’s to the Canadian Real Estate market. It is a form of coverage that protects you against financial loss if there are problems with the title to your property, therefore, Title Insurance can help protect you from many types of losses, including:
- Title defects (such as errors in recording)
- Off-Title building code infractions.
- Fraud or misrepresentation by sellers or others involved in the transaction, such as brokers and attorneys.
- Losses resulting from defects in property boundary defects.
How Title Insurance Works in Ontario
Title insurance is a regulated financial product that protects against specific deficiencies in the title to a parcel of land.
It is frequently used in Ontario to expedite real estate transactions. In the event of a problem discovered after purchasing the property, Title insurance protects the insured party against losses.
What Title Insurance Does Not Cover
Title insurance in Ontario is not “Boundary Insurance”. It does not reveal potential problems prior to purchasing the land. Additionally, certain items such as fences, boundary walls and other items, are excluded from coverage. Furthermore, it does not prevent you from buying a house that you might later regret because there was not enough research done on the property. Yikes!
To avoid these types of liabilities, a survey plan and a consultation with a surveyor can help you uncover and understand potential boundary issues, such as neighboring structures encroaching on the property before you close.
It is also important to note that your title insurance claim could be denied if there was prior knowledge of the issue before you purchased the property. Some may argue that this regulation encourages willful blindness in the real estate transaction however, title insurance does not cover negligence. If an up-to-date survey plan could have revealed the issue at hand, the insurance company could further deny your claim.
Your survey plan is an excellent addition to your title insurance purchase when it comes to protecting your real estate investments.
Types of Title Insurance in Ontario
There are three main types of title insurance in Ontario:
- Residential, this covers you with potential deficiencies in the title of the property that could make it difficult to sell or rent out. For example, if there is a problem with the land title itself (such as an unpaid mortgage), this type of policy would protect you from those issues.
- Commercial. If your business owns real estate and needs protection against any issues that could affect its ability to operate, this is what you may need.
- Lender Title Insurance policies cover lenders who lend money against properties being purchased by borrowers through mortgages;
The Title Insurance Industry in Ontario
The title insurance industry in Ontario is a multi-million-dollar business that provides coverage for real estate transactions. The major providers of title insurance are:
- Stewart Title,
- First Canadian Title
- Chicago Title
Of the five title insurance companies available, TitlePLUS is the only Canadian company and is operated by the Law Society of Upper Canada. The remaining are American companies. It is important to know that while their policies are substantially similar, they do differ in certain aspects of their coverage.
Usually real estate lawyers deal with one title insurance company whom they are comfortable and have a relationship with. However, we encourage you to do your own research and find out which policy works best for you.
Purchasing Title Insurance in Ontario
When you are ready to purchase title insurance, there are several things you should consider. The first is the cost associated with your policy. The price of a policy depends on several factors including:
- The value of your property
- The type of coverage you choose.
- Confirm that the policy is effective on your property’s exact closing date.
- Be sure that you understand what is included and excluded in the documents and review all of them carefully, paying attention to any fine print.
- When reviewing your documents, ensure that they accurately describe all the property you are purchasing.
Common Title Insurance Mistakes
- Believing Title Insurance covers all Boundary defects.
- Not understanding the title insurance process.
- Not researching title insurance providers.
- Not reading the title insurance policy.
Title Insurance Claims
A title insurance claim is a request for compensation from your insurer.
Technically speaking you can make the claim yourself or hire a lawyer to make one for you.
Making a title insurance claim yourself can be a frustrating and time-consuming process. An experienced lawyer may be able to get your claim approved at maximum value, however lawyer’s fees can be costly and add up quickly.
We recommend considering your options before choosing how to submit your claim.
If you do choose to hire a lawyer to handle your claim, your best bet is to find one who specializes in and has experience with title insurance claims.
Typically, real estate lawyers do not have this expertise.
Should you have questions about how to file a claim or what kinds of claims are eligible for reimbursement, you will be able to find this information in your policy.
Frequently Asked Questions:
Do I need Title Insurance?
Considering the value of the asset you are buying; a few hundred dollars is a small price to pay for a good insurance product. Although it is unlikely that you will ever have to make a claim, the costs associated with defects on title are high. Title insurance is a great way to protect your finances and your investment.
How much does Title Insurance cost?
It usually costs around $200 - $500 dollars for Residential Properties. This price may vary based on the value of the property and the title insurance company you choose.
Title insurance is a great product with excellent benefits. It is important to remember that title insurance does not cover all boundary related issues and it does not replace good boundary research.
Always make sure you obtain a copy of the survey plan before placing a bid. Together, title insurance and your survey plan can help protect you from liabilities that will cost you greatly down the road.