What is title insurance?

Title insurance guarantees that you own what you bought. When you purchase property in Ontario, the seller transfers ownership to you, but hidden problems can surface later: a spouse or creditor may claim rights to the property, a previous owner's mortgage may not have been properly discharged, or forged documents might turn up in the chain of title. Title insurance protects you financially if these issues emerge after closing.

Ontario real estate lawyers include title insurance as standard practice in residential and commercial transactions. The policy is purchased once at closing and covers you for as long as you own the property (or, for lender's insurance, until the mortgage is paid). Unlike other insurance that you renew yearly, title insurance is a permanent safeguard tied to your ownership.

There are two types: owner's insurance protects the buyer's equity in the home, while lender's insurance protects the mortgage lender's investment. Most lenders require lender's insurance, though owner's insurance is optional. If a title defect is discovered, the insurance company will either fix the problem, buy the policy back, or defend you in court. Without it, you could face significant legal costs or even lose part or all of your property claim.

When working with residential sales providers, title insurance is typically arranged through the lawyer handling your purchase and is a one-time cost at closing.