What is title insurance and is it required at closing in Ontario?
Title insurance is not required by law in Ontario. A standard owner's policy generally covers hidden defects in ownership, existing liens such as unpaid utilities, mortgages or property taxes, encroachments, survey and public-record errors, and title fraud.
A lender's policy is a separate product that protects the mortgage lender. Whether your lender requires title insurance depends on your mortgage terms, so ask your lender and your lawyer. A standard policy generally excludes defects you knew about before buying, environmental hazards, native land claims, zoning violations from later renovations, and problems unrelated to title. A victim of title fraud may also claim compensation from the government's Land Titles Assurance Fund.
The Financial Consumer Agency of Canada lists title insurance among one-time closing costs, and suggests budgeting 1.5% to 4% of the purchase price for all closing costs together. The cost of a policy and how it compares with a traditional title search depend on the insurer and your property, so ask your lawyer for the figures before you close. A lawyer can also explain what a policy would and would not cover for your purchase.
Key takeaways
- Title insurance is not required by law in Ontario.
- A standard owner's policy generally covers hidden ownership defects, existing liens, encroachments, survey and public-record errors, and title fraud.
- A standard policy generally excludes defects you knew about, environmental hazards, native land claims, zoning violations from later renovations and problems unrelated to title.
- A lender's policy is a separate product that protects the mortgage lender.