Real Estate
Title Insurance - Your Life Changing Safety Net
When it comes to buying a home in Ontario, your lawyer will likely ask you if you want to purchase title insurance. Although having title insurance is optional, it can protect you from many unforeseen situations for just a small one time fee. Here in this article, we talk about everything you need to know about the basics of title insurance in Canada.
What is Title Insurance
When you buy a real estate property, you’re buying more than just the physical home but you’re also buying the title which proves that you have the right to own a piece of land. In order to obtain the title, your lawyer will help submit a document for the title transfer. During this process, lawyers will also recommend you to purchase a title insurance policy because it can provide protection for both the buyer as well as the mortgage lender if the property is mortgaged. As the policy holders, it can offer you protection from certain risks that are present whenever real estate transactions are involved. Once purchased, title insurance protection remains for as long as the insured party is on the title and there are also no monthly renewal fees.
What Does Title Insurance Cover?
First off, title insurers stress the fact that their policies are certainly not intended to be any form of a home warranty and should not be misunderstood as such. For example, it does not provide coverage for how well built the property is and it does not provide coverage for the chattels, fixtures and additional appliances purchased as part of the transaction. Furthermore, it does not guarantee that you will be able to change the current use of the property or construct additions/improvements onto the property. With that said, here are just a few examples of what title insurance covers:
- Someone else claiming an interest (ownership) in title
- forgery, fraud or false impersonation to the extent they affect the validity of your interest in title.
- Typos and minor errors in the legal description of the property.
- Setback violations and violations of municipal zoning by-laws.
- Existing Liens on the title which includes construction and municipality charges.
- Easements regarding the right for someone else to use part of your property without owning it.
- Encroachments that would be disclosed by a new survey.
- Existing Work orders that affect the ownership of the property.
- Being forced to remove structures because they violate zoning.
By Law, Do I Need It?
As a home owner, you are not legally required to have title insurance. However, we recommend that all home owners do purchase title insurance as it essentially protects your ownership against certain losses. Although title insurance is generally purchased when you buy your home or when you refinance the property, title insurance can still be purchased any time after you buy your home. You will just have to make the one time payment when you buy the title insurance.
Where Can I get Title Insurance?
Depending on your lawyer, they may offer a title insurance policy from any one of the following title insurance companies available in Canada:
How Much Does Title Insurance Cost?
The cost for title insurance policy can vary between title insurance companies. For example, Stewart Title Guaranty Company charges the following for Freehold Resale Title Insurance:
| Total Purchase Price | Cost |
|---|---|
|
$0 – $500,000 |
$325.00 |
|
> $500,000 |
$325.00 plus ($0.90 per every
additional $1,000.00 in purchase
price above $500,000) |
| Total Purchase Price | Cost |
|---|---|
|
$0 – $500,000 |
$150.00 |
|
> $500,000 |
$150.00 plus ($0.90 per every
additional $1,000.00 in purchase
price above $500,000) |
In general, the cost can depend on a number of factors, such as the type of property, the purchase price, and the registered amount of the mortgage. As such, we advise you to speak to your lawyer about the full cost for purchasing title insurance.
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