What Title Insurance Covers in Ontario and When You Need It
Title insurance is a one-time policy that protects you, your lender or both against losses caused by problems with the ownership of your home, such as title fraud, an unknown lien or a survey defect. Ontario law does not require it, but most mortgage lenders do, so most financed purchases close with a policy. You pay the premium once, on closing, and an owner’s policy lasts as long as you own the home.
A forged mortgage or a fence built two feet onto the neighbour’s lot can stay hidden until years after closing. By then the seller is gone and the money has been paid out. Title insurance is the usual way Ontario buyers protect themselves against that kind of loss.
RealEstateLawyers.ca LLP is an Ontario real estate law firm that closes purchases and refinances across the province. This guide explains what a typical Ontario policy covers, what it leaves out and how to decide whether you need one.
What Title Insurance Covers in Ontario
There are two kinds of residential policy, and they protect different people.
| Policy | Who it protects | How long it lasts |
|---|---|---|
| Lender’s policy | Your mortgage lender | Until the mortgage is paid off, with coverage falling as the balance drops |
| Owner’s policy | You, the registered owner | As long as you own the home |
A lender’s policy does nothing for your own equity, even though you usually pay for it. That is why most buyers add an owner’s policy at the same time.
Most residential owner’s policies in Ontario cover:
- Title fraud and forgery, such as a fake transfer or mortgage registered against your home
- Liens, claims and other title defects the search did not reveal
- Encroachments and survey problems that an up-to-date survey would have shown
- Work orders and permit problems left by a previous owner, on many residential policies
- Zoning problems affecting existing structures, on many residential policies
- Legal costs of defending your title against a covered claim
Survey coverage is a large part of why title insurance is so common in Ontario. Many homes have surveys that are decades old, or none at all, and most lenders accept title insurance instead of a new survey. If a boundary question comes up later, our article on boundary fences and what to do if there is a dispute explains how those disputes usually play out.
Worked Example: A Fraudulent Mortgage
Suppose someone impersonates the owner of a paid-off $900,000 home and registers a $300,000 mortgage against it. Without title insurance, the owner would have to go to court to remove the fraudulent mortgage and pay the legal costs while that happens. With an owner’s policy, the insurer handles the covered claim and the legal work to clear title, subject to the policy wording.
| Without title insurance | With an owner’s policy | |
|---|---|---|
| Who deals with the fraudulent mortgage | You, through your own lawyer | The insurer, under the policy |
| Who pays the legal costs to clear title | You | The insurer, for a covered claim |
| What you pay up front | Nothing | A one-time premium on closing |
Our article on five things to know about title fraud covers how this kind of fraud usually happens and the warning signs to watch for.
What Title Insurance Does Not Cover
What a policy leaves out matters as much as what it covers. Common exclusions include:
| Typically excluded | Why it matters |
|---|---|
| Problems you knew about before closing | Insurers will not pay for a risk you accepted |
| Environmental contamination | Needs its own due diligence, such as an environmental assessment |
| Problems you create after closing | An unpermitted addition you build later is not covered |
| Government actions such as expropriation | Public law actions usually fall outside title coverage |
| Physical defects in the home | A leaking roof or failing furnace is something a home inspection should catch |
Each policy also lists exceptions specific to your property. Read them with your lawyer before you close. The Financial Services Regulatory Authority of Ontario’s guide to understanding title insurance also notes that some insurers sell extended coverage for an extra fee.
Do You Need Title Insurance?
| Your situation | Do you need a policy? |
|---|---|
| Buying with a mortgage | Almost always. Most lenders require a lender’s policy, and an owner’s policy is usually added at the same time |
| Buying with cash | Not required, but an owner’s policy protects you against fraud and hidden title defects |
| Refinancing | The new lender usually requires a new lender’s policy for the new loan |
| You already own a home without a policy | Some insurers sell owner’s policies to existing owners, often to guard against title fraud |
| Rural or unusual property | Some buyers choose a lawyer’s title opinion backed by a current survey instead |
A lawyer’s title opinion with a current survey still works, but it needs an up-to-date survey and more searches, so it can cost more and take longer. For most standard residential purchases, title insurance is the simpler route.
How Title Insurance Is Priced and Paid
You pay one premium on closing. The amount depends on the purchase price, the type of property and the insurer. On your lawyer’s quote it shows up as a disbursement, which is a cost your lawyer pays to a third party on your behalf. It sits separately from the legal fee. Because a policy can replace some of the searches a lawyer would otherwise order, part of the premium is often offset by lower search costs.
Title insurance is one of several closing costs that sit outside the legal fee. Our guide on how much a real estate lawyer costs in Ontario breaks down every disbursement you are likely to see on a purchase or refinance.
See the Premium on Your Quote Before You Commit
RealEstateLawyers.ca LLP lists title insurance as a separate disbursement on its quotes, next to the legal fee, registration costs, HST and land transfer tax. You can also speak with a lawyer about whether an owner’s policy makes sense for your purchase or refinance. Get your free quote and know your closing costs before you sign.
Frequently Asked Questions
Is title insurance mandatory in Ontario?
No. Ontario law does not require it. Most mortgage lenders do require a lender’s policy, and an owner’s policy is optional but common.
How long does title insurance last?
An owner’s policy lasts as long as you own the home. A lender’s policy lasts until the mortgage it covers is paid off.
Does title insurance cover a leaking roof or other defects in the house?
No. Title insurance only covers problems with ownership and title. To check the physical condition of the home, book a home inspection before you buy.
Can I buy title insurance after I close?
Some insurers sell owner’s policies to people who already own their homes, often as protection against title fraud. Ask your lawyer which options are available for your property.
Is title insurance included in a flat legal fee?
Usually not. The premium is normally listed as a disbursement on top of the legal fee. Ask for an itemized quote so you can see the premium as its own line.
This article provides general information only and is not legal advice. For advice about title insurance on your purchase or refinance, speak with a lawyer.
