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If you’re like most people, buying a home represents the single largest financial transaction of your lifetime. While most homeowners would buy home insurance in a heartbeat, a lot aren’t aware of another important kind of insurance: title insurance.

While your home insurance policy protects you from costly damage like fires and theft, what use is your home insurance if you aren’t the legal owner of your home? Title insurance protects you from defects against your home’s title you might not even be aware of.

What is Title Insurance?

As Dorothy from the Wizard of Oz said, there’s no place like home. But what if your home isn’t really yours? That’s where title insurance comes in handy. Title insurance protects your property’s title from defects. Common title defects include liens, right of ways, unpaid work orders and property taxes owing.

Unless you’re paying for your home in cash, you’ll need to obtain a mortgage. Before a lender will approve your mortgage, it needs to see proof you have home insurance and title insurance (although sometimes a survey will be sufficient).

TitlePLUS is the most popular and complete title insurance for homeowners. It’s important to purchase title insurance, although it doesn’t hurt to have a recent survey. If you run into any of the title defects mentioned above, you’ll more than likely be covered. Unlike home insurance, you don’t buy title insurance through your bank. Instead, you buy it from your real estate lawyer upon closing. Unlike home insurance, title insurance isn’t an ongoing cost; you’ll only pay a fee of about $100 to $300 once. After that, you’re covered for life.

For the peace of mind title insurance provides, it’s a bargain. If you run into a title defect, it could cost you thousands in legal fees to resolve. Imagine if the previous owner failed to pay his property tax bill and your local municipality came after you for the back taxes. Your dream home could easily turn into a nightmare!

While title insurance is useful, it does have its limitations. For example, if you were aware of a title defect like encroachment of your neighbour’s property when you bought your home, you’re probably not covered.

The Role of Your Real Estate Lawyer

Title insurance doesn’t act alone. Your real estate lawyer plays an important role in the home-buying experience. Before closing, your lawyer should perform a title search to make sure there aren’t any title defects and the person you’re buying the home from is the legal owner. It will also uncover any hidden issues like unpaid property taxes. If any defects are discovered, your lawyer will let you know and try to resolve them in time for closing.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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