Title Insurance in Ontario: What It Covers, What It Doesn't, and Why Your Lender Asks for It

What title insurance is

When you buy a home you expect to own it outright. Title insurance is the policy that responds if a hidden problem with that ownership surfaces after closing.

According to a guide from the Ontario real estate law firm formerly known as RBHF, it is a one-time policy purchased during the transaction that protects buyers and lenders against specific losses from defects in a property's title. There are no ongoing premiums, and it remains in effect for as long as you own the property. It covers risks that existed before you bought, were unknown at closing and could not reasonably have been found through standard legal searches.

In plain terms, "title" is your legal ownership. The policy is a financial backstop for the paperwork risk around it.

Two policies, two beneficiaries

The guide describes two kinds of policy.

• Lender's policy. Protects the mortgage lender. Most lenders require it as a condition of financing.
• Owner's policy. Protects you. Buyers can purchase it for additional protection.

This is why a lender's requirement shows up in a mortgage commitment. A lender wants to be sure its security is sound, and the policy is the standard way to do that. If you are working with a mortgage broker, the title insurance condition is one of the items your lawyer will arrange. We list it among the closing costs in our cash-at-closing guide.

Title insurance is typically recommended by your lawyer, ordered during closing and included in your closing costs. We are not quoting a price because premiums vary by policy and provider. Ask your lawyer for the figure.

What it typically covers

Coverage varies by policy, but the guide lists several common protections:

• Registration and record errors, such as incorrect legal descriptions, missing documents or clerical mistakes in the land registry.
• Fraud and title theft, including a forged document registered against your title or a mortgage placed without your knowledge.
• Undiscovered liens, such as unpaid contractor or tax claims that did not appear in the records at closing.
• Survey and boundary issues, including encroachments, particularly relevant for older and rural properties.

Many Ontario buyers first hear about the fraud protection. It is a real concern, but read your own policy for the exact wording, since the guide itself notes coverage varies.

What it does not cover

The same guide is clear about the limits.

• Known issues. A problem identified and disclosed before closing, such as a registered easement you agreed to or a visible encroachment, typically is not covered.
• Environmental problems. Soil contamination, underground fuel tanks, mould and hazardous materials need separate assessments.
• Physical condition. Foundation, roof, plumbing and electrical problems belong to a home inspection, not a title policy.

Title insurance and your lawyer's title search

A common misconception is that the policy replaces a title search. The guide says it does not. Your real estate lawyer reviews public records to confirm ownership, existing mortgages or liens, easements and restrictions before closing. Title insurance is the safety net for what slips through.

Conditions in your offer matter too. A financing condition, an inspection condition and a legal review condition are your chance to find problems and negotiate before you are committed. Title insurance is a backup, not a plan.

For first-time buyers, the policy is one of several costs to plan for alongside legal fees, land transfer tax and adjustments. The First Home Hub and our buying guide cover the rest of the process.

Questions to ask your lawyer

• Is this an owner's policy, a lender's policy or both, and who is paying for each?
• What exactly does the policy exclude?
• Does it cover survey issues, or do I still need a survey?
• How does it handle fraud and title theft?
• Is there anything in my file that would make an exception more likely?

FSRA, Ontario's financial regulator, also publishes consumer information on title insurance on its website, which is worth reading alongside your lawyer's advice. We were not able to load that page in preparing this article, so we have not relied on it for any statement above.