What Title Insurance Covers and Doesn't Cover in Ontario

When you buy a home, you are relying on the land registry records being right and on nobody having a hidden claim against the property. Title insurance is one way people try to protect themselves from problems with ownership that nobody spotted at closing.

This article explains in plain words what a policy may cover, what it usually leaves out, and what other protections exist in Ontario. The exact wording of a policy controls, so a lawyer should review any policy before you rely on it.

What title insurance is

Title insurance is optional in Ontario. You pay a one-time premium, and in return the policy may cover certain problems with the ownership of your property.

For residential property, coverage lasts as long as you own the property. That makes it different from many insurance products that you renew every year.

Think of it as protection aimed at problems that are hidden when you buy, rather than problems that are already visible. It is a contract, so what it pays for is set by its terms, and those terms are worth reading before you sign anything.

What a policy may cover

Ontario's financial regulator describes the following kinds of problems as ones a policy may cover.

• Unknown title defects, meaning problems with ownership that were not discovered before you bought.
• Existing liens against the property.
• Encroachments, such as a neighbour's structure crossing the boundary.
• Survey errors and errors in the public record.
• Title fraud.

Which of these a particular policy covers, and up to what limit, depends on its wording. Ask to see the policy and its list of covered risks, not just a summary.

What is generally not covered

Policies generally exclude defects the buyer knew about, environmental hazards and native land claims. The first exclusion matters most in practice: if you learn of a problem before closing, you should not expect insurance to pay for it later.

Exclusions are worth reading closely, because they set the limits of what you are paying for. If a covered risk or an exclusion is unclear, ask your lawyer to explain it in plain terms before you decide.

How the land registry fits in

Ontario's land registry is online only and holds the official records of property ownership for more than 7.4 million parcels. ServiceOntario reviews and certifies registrations, but it cannot search records, give legal advice or explain any property's records.

Documents are registered electronically through Teraview by authorized account holders, and anyone can search, view and download current and historical property records, such as a parcel register, through OnLand for a fee. Authorization to register land documents electronically is free to apply for, and applicants must provide 2 pieces of identification to guard against identity theft and real estate fraud.

Because the records are public and the system is electronic, having a lawyer review what the records show before closing is a practical step. A policy is meant to sit alongside that review, not replace it.

Other protections if title is wrong or stolen

Insurance is not the only remedy. For a fraudulent instrument registered on or after October 19, 2006, the usual rule that a registered instrument is effective as part of the register does not apply. The Director of Titles or a court may also rectify the register in that situation.

A person wrongfully deprived of land through fraud or a registration error may apply for compensation from the Land Titles Assurance Fund. The application goes to the Director of Titles within six years of suffering the loss, and a Hearings Officer decides eligibility and amount.

If you think you are a victim of title fraud, Ontario advises reporting it to local police, getting legal advice, contacting the Land Registry Office where the property is registered, speaking with your bank, and asking Equifax Canada and TransUnion Canada for a free security freeze.

These remedies depend on the facts, such as when an instrument was registered and whether the loss came from fraud or a registration error. They are separate from insurance, so how they apply to your situation is worth confirming with a lawyer.

What to do next

• Decide before closing whether you want a policy, since it is optional.
• Ask for the full policy wording and read the covered risks and exclusions.
• Ask your lawyer what the land registry records show for the property.
• Tell your lawyer about anything you already know about the property, because known defects are generally excluded.
• Keep the policy with your closing documents for as long as you own the home.
• If something goes wrong, get legal advice early and report suspected fraud.

Frequently asked questions