Title Insurance in Alberta: What It Covers and If You Need It

At some point in your purchase, you may be asked whether you want title insurance. It is often offered quickly and at the last minute, so it helps to understand what it is before you decide.

This article explains what title insurance is meant to cover, how lender and owner policies differ, and how it fits alongside Alberta's land titles system. Whether you want it is your choice, and a lawyer can help you weigh it for your property.

This article covers the law of Alberta.

What title insurance is

Alberta.ca describes title insurance as protection against problems with the title or certificate of ownership, such as breaches of local bylaws and liens from contractors who weren't paid.

In plain terms, it is an insurance policy bought once, around closing, that responds if certain defects or surprises tied to your ownership come to light later. What a particular policy covers is set out in its wording, so read the policy itself.

Lender's policy versus owner's policy

There are two kinds of policy, and the difference matters. A lender's policy protects only the lender, while an owner's policy can cover some non-title issues such as encroachments.

If your lender asks for a policy, that is typically for its own protection. Whether a lender requires title insurance depends on the lender and its instructions, so ask your lawyer to confirm what your mortgage commitment says.

Is it required, and is it a substitute for a survey?

The standard Alberta residential purchase contract does not require title insurance. It does require a Real Property Report.

Title insurance does not take the place of a Real Property Report. The report shows where buildings sit on the lot, so it answers a different question than an insurance policy does. Even if you buy a policy, you should still deal with the Real Property Report requirement in your contract.

How it fits with Alberta's land titles system

Alberta records ownership through Land Titles, and the system has its own safety net. Land Titles Assurance Fees are created by the Land Titles Act to pay claims by people who lose an interest in land through registrar error or fraud.

• Claims must be made within 6 years of the loss, with 3 months' notice to the registrar and the Minister of Justice.
• The Land Titles registrar can approve and finalize claims of up to $1,000.
• Larger claims proceed against the registrar in the Court of King's Bench of Alberta.

That fund responds to registrar error or fraud, so it is narrower than the range of problems a private policy might address. Whether a private policy adds value for you depends on the property and the policy terms, which is a good question for your lawyer.

Title insurance versus other closing charges

Title insurance is a separate matter from the government charges that come with registering your purchase. Alberta charges no land transfer tax on a home purchase. Buyers instead pay Land Titles registration charges based on the value of the land, generally the purchase price.

The transfer levy is $50 plus $5 for each $5000 or portion thereof of the value of the land. Because each part of a $5,000 increment is charged as a full increment, a $400,000 value gives $50 + 80 × $5 = $450. The $5 rate applies to submissions received by the Land Titles Office on or after October 20, 2024.

• If you take out a mortgage, a separate levy of $50 plus $5 for each $5000 or portion thereof of the principal secured applies when the mortgage is registered.
• A buyer paying cash with no mortgage does not pay the mortgage levy, which is calculated on the principal amount secured, not the purchase price.
• Property tax is a special lien on the land and improvements, which is why unpaid taxes are dealt with at closing.
• On request, a designated officer must issue a tax certificate showing taxes imposed for the year, taxes owing, tax arrears and any deferred taxes, and lawyers use it for the tax adjustment.

An insurance premium is a different cost again, and choosing whether to buy a policy does not change these registration and tax items. How the tax adjustment is split between you and the seller depends on your purchase contract, so it is worth confirming with your lawyer.

What to do next

• Ask who is offering the policy and whether it is for you, the lender, or both.
• Request the policy wording and read what is covered and what is excluded.
• Ask your lawyer whether your mortgage commitment requires any policy.
• Confirm your Real Property Report is being dealt with regardless of insurance.
• Ask for a breakdown of the Land Titles charges and the property tax adjustment so you can keep them separate from any insurance cost.
• Compare the cost with the protection offered. Premiums vary, and a lawyer or your insurer can give current quotes.

Frequently asked questions