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If you’re buying 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 1990s and is now a standard part of the home purchase process for most Buyers in Toronto.
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 Does Title Insurance Cover?
- 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
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. The average cost of title insurance in Ontario is 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!
While there are a handful of insurance providers in Ontario, the two companies our clients most commonly use are:
Talk to your lawyer about your options (and be prepared that they likely have a favoured provider that they’ve built a relationship with).
Other Things to Know
- Title insurance is important for condo buyers too – it doesn’t just apply to houses
- You only pay once – there isn’t any ongoing premium
- You can buy it at any time – not just when you initially purchase the property
- Once purchased, title insurance covers you for as long as you own the home