Does title insurance cover work orders and open permits on a property?

Open permits and outstanding work orders are a common issue in Ontario real estate transactions, and title insurance plays a specific — but limited — role. An open permit is one that was pulled for renovation or construction work but was never closed off with a final inspection. Outstanding work orders are orders issued by the municipality or a utility requiring certain work to be done.

Title insurance policies generally cover losses resulting from open permits and work orders that existed at the time of closing if you did not know about them. For example, if a previous owner pulled a permit for a bathroom renovation that was never inspected and closed, and the municipality later orders you to open walls for inspection and requires costly corrections, your title insurance may cover the resulting loss.

However, title insurance is not a guarantee that the work will be acceptable — it is financial protection against losses you actually suffer. Your lawyer should also search for known work orders and open permits as part of the title due diligence process. Some title insurers offer specific "known" work order endorsements if there is a permit you are already aware of, subject to conditions. If you discover open permits before closing, the better practice is to require the seller to close them before you take possession rather than relying solely on insurance.