What is Title Insurance? 4 Essential Tips
Information for Homebuyers in Ontario Wondering What it is and How it Works
Title insurance is a type of policy that protects the owner or lender of a property from financial losses resulting from defects in the property title. In other words, it safeguards the legal rights of the property owner or lender against issues such as liens, encroachments, and fraud.
This type of insurance provides coverage up to a specific amount and may also include legal fees related to defending the title rights. However, it’s important to note that some types of issues are not covered by title insurance, such as known defects, environmental hazards, and native land claims.
Is Title Insurance Mandatory?
The easy answer is no. Although title insurance in Ontario is not mandatory, most lenders require it as a condition of the mortgage. As a one-time fee paid at the time of closing, the cost of insurance varies depending on the property’s type, value, mortgage, and the insurer.
In Ontario, there are four primary title insurance companies:
- Title Plus
- First Canadian Title
- Stewart Title
- Chicago Title.
If you did not obtain title insurance when you originally purchased your home, you can still purchase an insurance policy after the fact. It’s crucial to discuss your options with your real estate lawyer to determine the right type of policy for your specific situation.
What issues does it cover?
Some of the issues covered by title insurance include unknown title defects, errors in public records and surveys, and related problems that may affect the property owner’s ability to sell, mortgage, or lease the property. Therefore, this insurance provides valuable protection and peace of mind to property owners, especially in situations where title issues may result in significant financial losses.
In Ontario it’s an essential safeguard that protects property owners and lenders against costly issues and defects. If you’re planning to buy a property in Ontario or have recently purchased one, it’s vital to speak with your local Toronto real estate agent or lawyer about obtaining the right type of insurance policy for your specific situation.