Questions about Title Insurance

October 9, 2020 | Posted by: Sherry Corbitt

Title insurance is something you will most likely read in your mortgage commitment as a requirement and have to purchase at the lawyer’s office. The average cost of title insurance in Ontario is around $250 and is purchased through your lawyer and paid as part of your closing costs.

But what is it? Why do you need it? Is it mandatory? Here is some information directly from the Financial Service Council of Ontario (link at end of this blog).

Title insurance can help protect you and your home against fraudsters trying to scam you!

What is Title Insurance?

Title insurance is an insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership.

Do I Really Need Title Insurance?

Title insurance is not a requirement in Ontario. The decision on whether or not you should purchase title insurance should be discussed with your lawyer, title insurance company or insurance agent/broker, to fully understand what type of protection title insurance can provide you, and to determine if other options exist. Once you get all the facts, you can make an informed decision based on your specific situation and needs. It is important to keep in mind that title insurance does not replace legal advice when purchasing property.

What Does Title Insurance Cover?

For a onetime fee, called a premium, a title insurance policy may provide protection from such losses as:

  • Unknown title defects (title issues that prevent you from having clear ownership of the property);
  • Existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property);
  • Encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property);
  • Title fraud;
  • Errors in surveys and public records; and
  • Other title-related issues that can affect your ability to sell, mortgage, or lease your property in the future.

Your title insurance policy will protect you as long as you own your property, and will cover losses up to the maximum coverage set out in the policy. It may also cover most legal expenses related to restoring your property’s title.

What is “Title Fraud”?

Title fraud (or real estate title fraud) is a form of real estate fraud that harms individual homeowners and their lenders. Title fraud typically involves a fraudster using stolen personal information, or forged documents to transfer your home’s title to him/herself (or an accomplice), without your knowledge. The fraudster then gets a mortgage on your home and disappears with the money.

https://www.fsco.gov.on.ca/en/insurance/brochures/Pages/understanding-title-insurance.aspx

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