Although some lenders do require it now for their mortgages, title insurance is technically optional in Ontario. It is arranged through the real estate lawyer.
The cost is a one-time fee of about $300. However, ask anyone that has worked at mortgage lender about the horror stories of non-title insurance and you’ll agree it’s worth the cost. Consider the following example from Stewart Title Guaranty Company’s claim bulletin:
The insured purchased a house and then subsequently received notice of an order from the municipality to remove three large additions that had been added to the home by the prior owner without the required permits. The order required that our insured either remove the additions or obtain permits for the construction. Unfortunately, to comply with the order, two of the additions required major structural work and the third addition was in violation of a local zoning by-law and would require a minor variance from the by-law to remain in its current location.
Resolution: Stewart Title paid approximately $110,000 to have the permits obtained and approved and obtained a minor variance to the zoning by-laws, allowing the third addition to remain in place.
For a one-time 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);
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.
*Note: Financial Services Commission of Ontario, Understanding Title Insurance