Title insurance is an insurance policy that protects you, the homeowner, against challenges to the ownership of your home OR from problems related to the title to your home. The policy provides coverage against losses due to title defects, even if the defects existed before you purchased your home. A title defect is a problem with the title which prevents free and clear ownership.
There are many types of defects such as encroachments (from neighbouring properties), unpaid liens, etc. Title insurance policies protect you for as long as you own the property. It protects against a number of risks that a solicitor’s opinion on title may not cover.
These risks include:
- Title fraud and forgery, which results in someone claiming to own an interest in the title to your land.
- Encroachments that would be disclosed by a new survey (for example, a neighbour’s deck partly on your land).
- Easements – the right acquired for access to or over another person’s property for a specific purpose, such as for a driveway or public utilities and upon purchase you may be unaware of these easements.
- Zoning non-compliance (i.e. where the property use does not meet the local municipal by-laws) OR when someone else is claiming to have an interest in your land (i.e. a previous owner of the property not being discharged from title).
Title insurance is generally purchased when you buy your home or when you refinance it, although it can be purchased any time after you buy your home. You will only make one premium payment when you first buy the insurance. Your lawyer can explain the coverage further and can order the policy on your behalf.