What are 'off-title' risks and does title insurance cover them?

"Off-title" risks are issues that do not appear in the registered land title records but can still affect your use or enjoyment of a property. These include: outstanding property tax arrears; local improvement charges levied by the municipality for sidewalks, sewers, or road works; outstanding utility bills; zoning bylaw violations in the physical improvements on the land; Heritage designation restrictions; and in some cases, environmental notices or orders.

Your lawyer typically checks some off-title matters as part of the due diligence process — for example, running a tax arrears search, checking for municipal work orders, and reviewing the zoning certificate. But not everything is discoverable through searches, especially physical problems or matters in the hands of agencies that do not always report promptly.

Title insurance fills some of these gaps. Standard residential policies generally include coverage for losses from: outstanding municipal utility accounts; certain work orders for pre-existing conditions; and zoning compliance issues for existing structures. But off-title environmental contamination is typically excluded (you need a separate environmental assessment if that is a concern), and physical defects in the building itself are not covered (that is what a home inspection is for).