What is title insurance and do I need it when buying a home in Ontario?
Title insurance is a policy that protects you — and your lender — against financial losses arising from defects in a property's title that were unknown at the time you bought it. Unlike most insurance, which protects against future events, title insurance mainly covers losses from past problems that existed before you purchased but were not discovered at closing.
In Ontario, two separate title insurance policies are typical in a residential purchase: an owner's policy (protecting the buyer) and a lender's policy (protecting the mortgage lender). Both are purchased at closing for a one-time premium. The owner's policy remains in force for as long as you own the property and protects your heirs as well. There is no annual renewal premium.
Title insurance is not legally required, but it is strongly recommended by nearly every Ontario real estate lawyer and required by virtually all mortgage lenders as a condition of advancing funds. The cost is modest relative to the protection it provides — for a typical residential purchase in Ontario, the one-time premium varies based on the property's value. Your lawyer will obtain quotes and arrange the policy on your behalf at closing.
Key takeaways
- Title insurance covers losses from title defects that were unknown when you bought the property.
- There are two separate policies: one for you (owner) and one for your lender.
- A one-time premium at closing provides lifetime coverage for the owner's policy.
- Title insurance is not legally mandatory but is required by almost all mortgage lenders.