Do I Need Title Insurance to Buy a House?

When purchasing real estate, you may encounter the question of title insurance. Whether you want title insurance may be asked by your lawyer or insurer, or it may be required by your mortgagor. Unlike auto and home insurance, you've probably never heard of title insurance before. So how do you know if you need it? Let us walk you through some of the basics. 

What is title insurance?

According to the Financial Services Commission of Ontario, title insurance is:

"[A]n insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership."

If you have title insurance, you're actually protected against a wide range of unfortunate circumstances regarding your property purchase or ownership of the property. Those protections include: 

• Unknown title defects that might prevent you from having clear ownership of the property 
• Existing liens against the property’s title, such as unpaid debts from utilities, mortgages, property taxes, etc. 
• Encroachment issues with neighboring properties, such as a fence or structure that crosses the property line 
• Title fraud
• Errors in surveys and public records
• Other title-­related issues that can affect your ability to sell, mortgage, or lease your property in the future

Different types of title insurance offer variable coverage, from comprehensive to gap coverage, survey coverage, legal coverage, and more. Title insurance can also save you time and money, as it simplifies the closing process for your lawyer. 

Do I need title insurance?

Acquring title insurance is not required when purchasing real estate in Ontario, but it can help you through some sticky (and expensive) situations that may arise. Whether you need title insurance will depend on unique factors related to your purchase. Discuss your options with your lawyer, title insurance company, or insurance agent/broker before coming to a decision. Remember, buying title insurance does not replace legal advice when purchasing real estate. 

How do I get title insurance? 

You can purchase title insurance through your lawyer or title insurance company, or you can contact an insurance agent/broker. Title insurance is normally purchased when you buy a piece of real estate. The cost of title insurance varies based on the value of your property and the insurance company's rates, and includes a one-time premium payment. 

Can I ask my Realtor about title insurance?

Yes! An experience Realtor will discuss the benefits and risks of title insurance with you, and can refer you to competent lawyers, insurers, or brokers for detailed policy information. As Realtors, we have a responsibility to act in our clients' best interests, and that includes making sure they understand their options and acquire the right protections for their purchase. We'd be happy to discuss the ins and outs of title insurance with you. Drop us a line with your questions.