Title insurance is widely used in Ontario real estate transactions and is often used to replace or augment what is referred to as the ‘solicitor’s opinion on title’. In a previous post, I discussed title-related risks and what you as a HomeBuyer can do to protect yourself. One method of protection is a policy of title insurance, and in this post, we will delve a little deeper in to what that means for the HomeBuyer.
Although the risk of fraud may always exist, a policy of title insurance provides coverage for title-related risks associated with real estate transactions. This kind of policy of insurance is designed to cover, among other things, unpredictable or undetectable issues such as forgery or fraud that can affect your rights of ownership and obligates the insurer to protect your interest. Unlike other kinds of insurance, you will only pay a one-time premium and the coverage will last for as long as you own your home.
Each insurer that offers a title insurance product will have a unique approach to resolving problems – or will offer to resolve them in ways specific to the circumstances. For example, the problem may be defended by the insurer in court or the insurer may compensate the HomeBuyer financially. This, of course, will depend on whether the problem you encounter is covered under your policy.
As with any insurance policy, there are exclusions. Typical ones include risks that you create yourself or that you knew about but failed to tell the insurer about. Other typical exclusions are environmental hazards as well as native land claims, to list but a few. You will need to consult your particular policy for the level of coverage that you are acquiring.
If you already own your home, but did not purchase title insurance at the time of the purchase, most title insurers offer a policy for HomeOwners. This is primarily a fraud prevention tool and will provide coverage for the cost of defending your ownership to the property if you are ever a victim of fraud.
Although the job of your lawyer is to ensure you have proper title to the home on the day you close your transaction, this does not protect you against unknown or undetectible risks that can arise after the sale has been completed. Title insurance fills the gap and provides HomeOwners with a practical way of resolving what can be very expensive issues if they should arise.
Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law. Email Rachel
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