Title Insurance vs. Title Search: What Ontario Buyers Get

When you buy a home in Ontario, your lawyer checks the property's title before closing. You will often also be offered title insurance. It is easy to assume the two do the same job, but they do not.

This article explains in plain terms what a search can and cannot show, what kinds of problems can sit outside the records, and what questions to ask about a policy. The exact coverage of any policy depends on its wording, so read it carefully.

What a title search does

A title search is a review of the public land records for a property. It shows who is registered as the owner and what claims are registered against the property, such as mortgages and liens. It is a look at the record as it stands on the day of the search.

A search is only as complete as the record. If a claim has not been registered, or a right exists without any registration, the search may not show it.

Problems a search can reveal

Several kinds of claims can be registered against a property and may be found by a search. These are things you would want dealt with before closing.

• Tax debts: the Minister may certify unpaid tax as a debt, and a memorial can then be recorded in a provincial land registry to create a charge or lien on the debtor's property.
• Municipal tax arrears: a municipal treasurer may register a tax arrears certificate against a property once the conditions in the Municipal Act, 2001 are met.
• Construction liens: a contractor's lien generally expires unless it is preserved within 60 days.
• Lawsuits about the land: starting a lawsuit that puts an interest in land in question is not notice to outsiders until a certificate of pending litigation is registered on title.

A charge created by a CRA memorial ranks behind any charge, lien or interest that was perfected before the memorial was recorded. Which claim comes first can matter a great deal, so ask your lawyer how any registered item will be cleared.

Problems a search may not catch

Some rights can arise from how land has been used over time, not from a document. A right of way or other easement can be acquired by prescription, which requires actual enjoyment as of right, without interruption, for the full 20 years. An action to recover land must generally be brought within ten years after the right first accrued.

There is an important exception. For land registered under the Land Titles Act, no title, right or interest adverse to the registered owner can be acquired by any length of possession or by prescription. A claim against a first owner registered with possessory title only can still be preserved for a person who was in possession when that first registration took place. Which system applies to a property is something your lawyer can confirm.

Other issues, such as a boundary problem or an encroachment, may only show up on a survey or a visit to the property. A record search will not replace looking at the property itself.

Where title insurance fits

Title insurance is an insurance policy, sold separately from the legal work of a search. Unlike a search, which tells you what the record shows, a policy is a contract in which an insurer agrees to respond to certain covered problems. What is covered, what is excluded, and the limits are all set by the policy's own terms.

Because policies differ, do not assume that every problem described above is covered. Exclusions are common in insurance, and a known problem is something you would normally want fixed before closing, not insured afterwards. Ask for the policy wording and ask your lawyer to walk you through it.

What to do next

In most Ontario transfers, the transfer of title must be signed for completeness by two different lawyers, one acting for the transferor and one for the transferee. Some transfers, such as those within a family or between related parties, may be completed by one lawyer acting for both sides under the Law Society's professional standards. In the electronic registration system, only a lawyer may sign for completeness a document that requires compliance with law statements.

• Ask your lawyer what the title search found and how each registered item will be cleared.
• Ask whether the property is in the Land Titles system.
• Request the title insurance policy wording and a plain explanation of exclusions.
• Arrange a survey or inspection if boundaries or shared access matter to you.
• Raise any questions before closing, not after.

Frequently asked questions