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So you’ve bought a house or condo in Toronto…your lawyer will inevitably ask you if you want to purchase title insurance.

Title insurance came to Canada in the 1990’s and is now a standard part of the home purchase process for most Buyers. When you buy a home, you’re buying  more than a physical structure, you’re also buying a title – the legal term for the right to own a piece of land. Title insurance essentially protects your ownership against any losses you might incur because of undetected or unknown title defects (see below). Title insurers assume the risk in a real estate transaction – meaning that if there is something wrong with the title, the insurer will take responsibility. Having title insurance also facilitates the closing of your home – if issues are discovered that can’t be rectified by your planned closing date, title insurance will make sure you close on time.

What Title Insurance Covers

  • Someone else claiming an interest in the property
  • Forgery and fraud
  • Typos and minor errors in the legal description of the property
  • Liens on the property (a legal claim by someone else on the property)
  • Construction liens (a lien placed on a property because of unpaid contractor bills)
  • Easements (the right for someone else to use part of your property without owning it – for example, a shared driveway)
  • Work orders
  • Being forced to remove structures because they violate zoning
Find out that the previous owner didn’t pay his contractor and there are construction liens on your new house? Covered by title insurance. Discover that someone has fraudulently gotten access to your title? Covered. Of course, title insurance doesn’t cover everything that might go wrong with your house. It doesn’t guarantee that you paid the right price for the house and it doesn’t guarantee that the physical structure is sound. Got caught up in a bidding war and paid too much? Not covered. Find surprise knob and tube wiring in your new house? Not covered.

How much is Title Insurance in Ontario?

Unlike most insurance policies that you pay every year, title insurance is paid once, upon closing, and valid for the entire time you own that home. It costs around $250 and is purchased through your lawyer. Title insurance does eliminate the need for your lawyer to do many expensive searches, so you might actually end up saving money by buying title insurance. And with title insurance, your bank won’t likely require a survey (outlining the physical boundaries of your property), which is a good thing in Toronto, since most homes here don’t have up-to-date surveys.  The peace of mind that knowing your greatest asset is protected is probably worth $250!

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