When we quote our all inclusive fee to a real estate purchaser and list the various items included – search fees, transfer fee, registration fee, title insurance, disbursements and HST – we are often asked ‘what is title insurance?’. While title insurance is not a requirement in Ontario, as a firm, we purchase title insurance for every buyer as part of our services. Here is a short summary of what title insurance is:
For a low one-time fee relative to the cost of your real estate purchase, a title insurance policy protects you and the mortgage lender against losses or damages suffered as a result of covered title defects. Examples of title defects and related risks typically covered by title insurance include:
- Contravention of municipal zoning by-laws by previous owners
- Existing liens against the property (for unpaid debts, property taxes or public utility arrears)
- Unpaid property taxes by a previous owner
- Unknown defects in the title (these may prevent you from having clear ownership of property)
- Errors in surveys and public records
- Title fraud and/or forgery which may invalidate your title (prior to and after closing)
- Any unregistered hydro easement
- The lack of a right of access to and from your property
- Your inability to use the property as a single or multi-family dwelling as provided for in your Agreement to purchase the property
In the event you experience a financial loss due to a title defect covered by the title policy, you would make a claim for compensation as per your policy in much the same way you make a claim under your home or auto insurance policy. Typically, there is no deductible.
In our experience, title insurance is a “no brainer” decision for most home buyers. The cost of title insurance on homes purchased for less than $500,000.00 ranges from $150 – $400. The cost depends on the specific property being purchased and the specific policy being purchased as there are different types of policies providing various levels of coverage. The cost is easily offset by the savings from no longer having to pay the lawyer to complete ‘off-title’ searches as title insurance compensates the purchaser if there are any undisclosed off title issues.
Title insurance is a great product that protects you for as long as you own the property. The Financial Services Commission of Ontario (FSCO) provides this brochure, which is a great resource for learning about title insurance. When you purchase a property, speak to us about making an informed decision about title insurance.