Title Insurance at an Ontario Closing: Cost, Coverage and Whether to Buy

You are looking at your lawyer's closing account and see a line for title insurance. You did not ask for it, you are not sure what it protects, and you wonder whether you can say no. Those are fair questions, and the answer depends partly on your lender.

This article explains in plain terms what title insurance is, what it generally covers, how its cost shows up on your account, and how to decide with your lawyer. It is general information and cannot replace advice on your own purchase.

What title insurance is

Title is your legal ownership of a property. Title insurance is insurance aimed at problems with that ownership. The Financial Services Regulatory Authority of Ontario says residential title insurance can be bought through a lawyer, a title insurance company or an agent or broker.

It is different from the home insurance you buy for fire, theft or water damage. Home insurance protects the building and your belongings. Title insurance deals with defects in the ownership record or in how the property was transferred.

What it generally covers

According to FSRA, these policies cover title risks such as fraud and forgery and include legal expense coverage for defending title. In plain words, if someone claims an interest in your home because of a forged document, the policy is designed to help with the cost of dealing with that claim.

Every policy has its own wording, exclusions and limits. Ask your lawyer for a copy of the policy or its summary, and read the exclusions section.

• Fraud and forgery affecting title
• Legal expenses to defend your title
• Other title risks, depending on the specific policy wording
• Matters excluded by the policy, which you should read before closing

What it costs and where the charge appears

The premium can vary by insurer, property value and the type of policy. For that reason, this article does not quote a figure. Ask your lawyer for the exact premium, and for any extra charges linked to the policy, as separate lines.

How the title insurance charge appears on your closing account depends on how the policy is arranged, so it is worth confirming with your lawyer. Land transfer tax is also paid through your lawyer when the conveyance is tendered for registration, so the account may show several third-party amounts together.

Is it required?

Whether you need title insurance on your purchase depends on your situation, so it is worth confirming with your lawyer. Where it is mandatory, it is usually because your lender requires a policy as a condition of the mortgage. That is a lender requirement, not a statute, so read your mortgage instructions or ask your lender or lawyer.

If you are paying cash with no lender, the decision is yours after hearing your lawyer's advice. Some buyers also compare title insurance with traditional steps, such as reviewing the parcel register and registered documents. The Province charges set fees for copies of those records, such as $36.50 total for a parcel register copy including its first page, plus $2.56 for each additional page.

Buyers who are assuming more risk, such as buying an older property with unclear history or work done without permits, should ask their lawyer what the policy would and would not respond to.

What to do before closing

• Check your mortgage commitment or lender instructions for any title insurance requirement.
• Ask your lawyer who the insurer is and who you are buying through.
• Request the exact premium and a list of all related charges.
• Read the policy summary, especially the exclusions and limits.
• Tell your lawyer about anything unusual, such as unregistered renovations or boundary concerns.
• Keep your policy with your closing documents for the future.

If something on the account does not make sense, ask for an explanation before closing day. It is easier to settle questions before funds are released.

Frequently asked questions