What is Title Insurance?
Title insurance is an insurance policy that protects the home or cottage owner, against challenges to the ownership of your home/cottage or from problems related to the title to your home or cottage. The policy provides coverage against losses due to title defects, even if the defects existed before you purchased your home. A title defect is a problem with the title which prevents free and clear ownership. There are many types of defects such as rights of way, encroachments (from neighboring properties), unpaid liens, etc.
Title insurance policies protect you for as long as policy holder owns the property. It protects against a number of risks that a solicitor's opinion on title may not cover.
These risks include:
- Fraud and forgery, including someone taking your title through fraud or forgery
- Encroachments that would be disclosed by a new survey (for example, a neighbors' deck being partly on the property)
- Easements (the right acquired for access to or over another person's property for a specific purpose, such as for a driveway or public utilities) over the property that would be disclosed by a new survey
- Zoning non-compliance (i.e. where the property use does not meet the local municipal by-laws)
- Someone other than the home owner having interest (i.e. a previous owner of the property not being discharged from title)
Title insurance is generally purchased when you buy your home or cottage, although it can be purchased any time after you buy your home.
Do I need title insurance?
Title insurance is not a requirement in Ontario. The decision on whether or not you should purchase title insurance should be discussed with your lawyer, title insurance company or insurance agent/broker, to fully understand what type of protection title insurance can provide you, and to determine if other options exist.
