Title insurance has been around in Ontario for about 20 years. As its name suggests, it was originally designed to insure property owners against defects in the ownership of their property, which could include the location of the batteries, the quantity of land under ownership, the quality of ownership, (meaning the type and number of property rights contained in the owner’s deed), the right of an owner to transfer ownership of the property, the right of access to the property, and so on.
There are currently five title insurance companies licensed to offer title insurance in Ontario. All but 1 are American: TitlePlus is owned and operated by LawPro, the company which provides malpractice insurance coverage to Ontario lawyers.
Title insurance in Ontario also includes coverage against issues such as inaccuracies in the information gathered by the lawyer when doing due diligence inquires, such as failure to mention special municipal levies, or, in the case of condominiums, failure to mention a special assessment or cash call against the condominium owners. It also covers situations where a structure such as a porch is located on the road allowance, or a deck or shed encroaches onto a neighbour’s property, or a structure on the property is located closer to the lot line than is permitted by the by-law. Minor title issues can also be covered.
Further, the property owner is insured against the risk of mortgage fraud and title fraud, in which someone impersonates the rightful owner and places a mortgage on the property, or sells the property to an unsuspecting buyer.
These coverages are all valid for as long as the insured owner owns the property.
Title insurance is also available to mortgage lenders, and in fact lenders will get broader coverage than property owners.
Title insurance is arranged by your lawyer; often it is a requirement of your mortgage loan.
The cost of title insurance is fairly modest, and is paid at the closing of the purchase or the mortgage transaction and is in effect for the duration of the ownership or the mortgage loan, as the case may be. There is no deductible payable on claims. The policy limit is the purchase price or mortgagee loan amount.
A further consideration in choosing title insurance is what you save in not paying for information about issues other than the property title; these can add several hundred dollars to your lawyer’s bill. And if a survey is needed to support these inquiries, the cost of proceeding without title insurance can balloon to over $2,000.00. It has been said that title insurance pays for itself in saving the other “search costs”.
The downside of title insurance is that it will not cover all potential issues. There are always limitations to coverage as well as exclusions: not every risk is covered. Your lawyer will discuss the various options available to you. If he or she does not do this, you are encouraged to ask. After all, it’s your property, your money and your risk.