- A title search examines the registered record. Title insurance covers certain risks that a search cannot eliminate.
- Title insurance is a one-time premium and lasts as long as the insured owns the property.
- It covers title fraud, which has become a significant risk in Ontario.
- It does not cover known defects disclosed before closing, or physical condition.
The search
A title search examines the registered history of the property to confirm the seller can convey what they are purporting to convey and to identify registered interests: mortgages and charges, liens, easements and rights of way, restrictive covenants, and any other encumbrance.
Off-title searches supplement it, covering tax arrears, work orders and outstanding building permits, utility arrears, and zoning and compliance matters.
Where a problem is found, the buyer’s lawyer raises a requisition requiring it be resolved before closing.
What a search cannot do
A search examines the record. It cannot detect what the record does not show:
- A forged instrument that appears regular on its face.
- An unregistered interest.
- Some survey and boundary problems, where no current survey exists.
- Certain compliance issues that never generated a registration.
- An error in the registry itself.
These are the risks title insurance is designed to address.
What a policy covers
Coverage varies by policy, but a residential owner’s policy typically covers title fraud and forgery; certain defects that would have been revealed by an up-to-date survey; some zoning and setback non-compliance existing at the date of policy; unmarketability of title; and certain unregistered liens and encumbrances predating the policy.
Title fraud deserves emphasis. Ontario has seen fraudulent transfers and fraudulent mortgages registered against properties, sometimes on homes that were vacant or occupied by tenants. Unwinding such a registration without insurance is expensive and slow. With coverage, the insurer generally takes on the defence and the loss.
The premium is paid once and the coverage continues for as long as the insured owns the property.
What it does not cover
Known defects disclosed to the buyer before closing and accepted are generally excluded, insurance does not convert a known problem into a covered one.
Physical condition is not covered. Title insurance is not a home warranty and says nothing about the roof, the foundation, or the wiring.
Environmental contamination is generally excluded, as are matters created or agreed to by the insured, and native title claims in some policies.
Buyers sometimes treat a policy as general protection against a bad purchase. It is not.
Why both
Some buyers ask whether insurance removes the need for a proper search. It does not, and a lawyer will conduct one regardless.
A search resolves problems before closing, when the seller can still be required to fix them. Insurance responds to problems discovered afterwards, when the seller may be gone.
It is also usually cheaper to insure over a minor, quantifiable defect than to delay a closing while it is cured, which is a legitimate and common use of a policy.
Lender and owner policies
Lenders generally require their own policy, which protects the lender’s security interest, not the owner.
An owner’s policy is separate and protects the buyer’s equity. Where a lender policy has been arranged, adding an owner’s policy is usually inexpensive, and buyers who assume the lender policy protects them are mistaken.
Common questions
Is title insurance mandatory?
Not by law, but lenders generally require a policy, and in practice most residential transactions include one.
Does it cover me if a survey shows the fence is on my neighbour’s land?
Certain survey and boundary matters are covered depending on the policy. It is one of the more common claims.
Does it transfer to a buyer when I sell?
No. It protects the insured owner while they own the property. A new buyer obtains their own policy.
Do I still need a survey?
Many transactions proceed on insurance instead of a new survey. Where boundaries, additions or planned construction matter, a current survey remains worthwhile.
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