What Is Title Insurance and Do You Need It in Ontario?

Quick Overview

Title insurance is a one-time policy that protects you against legal defects in a property’s ownership that already exist when you buy it
It is different from home insurance, which covers future events like fire or flood
There are two policies: an owner’s policy for you and a lender’s policy for the bank. The lender’s policy does not protect you
It is not mandatory under Ontario law, but lenders almost always require one before advancing mortgage funds
It commonly covers title fraud, undisclosed liens, certain zoning violations and survey-type problems. It does not cover known defects or the physical condition of the home
Your lawyer must tell you that title insurance is optional and explain the alternatives

What Title Insurance Actually Does

Home insurance looks forward. It pays when something happens after you own the property, such as a fire or a burst pipe. Title insurance looks backward. It protects you against problems with the property’s legal ownership that were already there on the day you bought it, even if nobody finds them for years (Ownright).

Even a careful title search only reveals what is on the public record. Unpermitted work by a previous owner, a hidden encroachment or a forged document may not show up in a search. Title insurance exists to cover that gap, so the financial loss does not land on you.

Owner’s Policy and Lender’s Policy

Most Ontario purchases involve two separate policies.

The owner’s policy protects you. If a covered problem comes up, such as a neighbour disputing a boundary that existed before you bought, the insurer can defend your title and pay the legal costs, or compensate you for the loss. It lasts as long as you own the property. Providers such as Stewart Title also offer an existing owner policy for people who did not buy coverage when they purchased.

The lender’s policy protects only the bank. It covers the validity and priority of the mortgage, and its coverage shrinks as you pay down the mortgage. If you buy only the lender’s policy, you have no title insurance protection yourself (Chicago Title Canada).

What It Typically Covers

Policies vary by insurer and by property, so your lawyer should check the wording. Common coverage, according to Wagner Sidlofsky LLP and the TitlePLUS sample owner policy, includes:

Title fraud and forgery, including forged transfers and identity theft
Liens that existed before the policy date, such as unpaid property taxes or old mortgages that were never discharged
Errors in public records
Encroachments that already existed
Certain zoning and building by-law violations that existed before closing
Problems an up-to-date survey would have revealed
Unregistered easements and lack of legal access to the property

Coverage for zoning and work orders only applies to problems that existed before the policy date. If you build a deck without a permit after you move in, that is not covered.

What It Does Not Cover

Every policy has exclusions. The ones you are most likely to run into are:

Known defects. If you or your lawyer know about a problem before closing, it is usually listed in the policy’s exceptions and not covered unless the insurer agrees otherwise.
Things you create or agree to. If you change the property or make an agreement after closing that causes a problem, the insurer is not responsible.
Environmental issues. The TitlePLUS policy wording excludes matters such as hazardous substances, underground fuel tanks and mold (TitlePLUS sample policy).
Physical condition. Title insurance is not a home warranty. TitlePLUS states that matters relating only to the physical condition of improvements do not make title unmarketable. Stewart Title also excludes physical or structural defects (Stewart Title residential owner policy).
Government action. Expropriation and future zoning changes are generally excluded.

Always read the exclusions section of a policy before you rely on it.

Title Insurance, Title Searches and Surveys

Ontario has two land registration systems: the older Registry system and the Land Titles system. How much of a property’s history your lawyer can confirm depends partly on which one applies to your property.

Title insurance has become a common alternative to commissioning a new survey, which can be costly and slow a closing. If a boundary or setback problem exists but a new survey was skipped, the policy can respond. It also reduces the need for some separate municipal and utility searches. Your lawyer decides which searches to do based on the property and the lender’s instructions.

Is Title Insurance Mandatory?

Not by law. But if you are borrowing money to buy, your lender will almost certainly require a lender’s policy as a condition of releasing the mortgage funds.

The Law Society of Ontario sets specific rules for lawyers on this point. Under Rule 3.2-9.4 of the Rules of Professional Conduct, a lawyer must assess all reasonable options to assure title and must tell the client that title insurance is not mandatory and is not the only option. Rule 3.2-9.5 prohibits a lawyer from receiving any compensation from a title insurer for recommending a product, and Rule 3.2-9.6 requires the lawyer to tell the client that no commission or fee is being paid to the lawyer.

What It Costs

Title insurance is a single premium paid at closing, not an annual cost. The amount depends on the purchase price and the type of property. Published guides put typical residential premiums in the range of a few hundred dollars, rising for higher-priced homes (WOWA). Insurers such as Stewart Title and Chicago Title offer online quote tools. Your lawyer can confirm the exact premium for your purchase before closing, and it appears as a disbursement on your closing documents.

Making a Claim

If you discover a covered problem, notify the insurer promptly and cooperate with its requests for information. The TitlePLUS policy provides that a failure to cooperate can reduce coverage to the extent it affects the insurer’s ability to deal with the claim (TitlePLUS sample policy).

The insurer decides how to resolve a valid claim. It may defend your title at its own expense, fix the defect itself (for example, by negotiating with a neighbour or the municipality), or pay your loss up to the policy limit.

Title Fraud and Why It Matters

Title fraud usually follows one of two patterns. In a fraudulent transfer, someone impersonates the owner and sells the property. In mortgage fraud, someone impersonates the owner and takes out a mortgage against the property. Properties with a lot of equity and absent or elderly owners are common targets.

Ontario also has a compensation fund, the Land Titles Assurance Fund, set up under the Land Titles Act. In certain circumstances it can compensate people for fraud, and for errors and omissions in the land registration system. Claims are decided under its own rules of procedure and go to a hearing before a Hearings Officer. Whether the Fund is available can depend on the property, so ask your lawyer. A title insurance owner’s policy that covers fraud can respond directly instead.

In 2025 the federal anti-money laundering regime was extended to title insurers. As of October 1, 2025, title insurers have identity verification and reporting obligations to FINTRAC, according to a Law Society of Ontario notice. You may be asked for additional identification and transaction details when a policy is arranged.

Who Arranges and Pays for It

Your lawyer normally arranges the policy as part of the closing. The buyer pays the premium, which is included in the closing costs and paid from the funds you provide to your lawyer’s trust account.

Court Decisions on Title Insurance

Ontario’s Court of Appeal has dealt with what counts as a covered title defect.

In MacDonald v. Chicago Title Insurance Co. of Canada, 2015 ONCA 842, homeowners discovered that a previous owner had removed load-bearing walls without a permit. The court treated the standard-form policy as a question of law reviewed for correctness, and found coverage because the municipal enforcement made title unmarketable (Thomson Reuters Practical Law).

In Breen v. FCT Insurance Company Ltd., 2019 ONCA 598, the court narrowed how far MacDonald goes. Construction defects do not automatically make title unmarketable, so title insurance is not a general home warranty.

The takeaway for buyers is that the wording of the policy and the nature of the defect decide whether you are covered.

Getting Advice Before Closing

An experienced Ottawa Real Estate Lawyer can explain what a policy covers for the specific property you are buying, whether any known issues will be excluded, and whether you want to consider a survey or other searches as alternatives. LMS Lawyers advises buyers on residential purchases across Ottawa and can go over the policy options with you before you close.

FAQs

Is title insurance required in Ontario?
Not by law. Your lender will almost certainly require one before releasing mortgage funds, and your lawyer must explain that it is optional for you.

Does a lender’s policy protect me?
No. It protects only the lender’s interest in the mortgage. If you want protection, you need an owner’s policy.

Does title insurance cover problems I find after I move in?
Only if the problem is a covered risk that already existed at closing. Known defects, physical defects and anything you cause after closing are generally excluded.

How often do I pay for title insurance?
Once, at closing. There are no annual premiums.

Can I buy title insurance after closing?
Some insurers offer an existing owner policy for people who did not buy coverage at closing. Check with your lawyer or the insurer for eligibility.

Summary

Title insurance protects against legal defects in ownership that already exist when you buy a home, and it is paid for once at closing. The owner’s policy protects you, while the lender’s policy protects only the bank. Common coverage includes title fraud, undisclosed liens, certain zoning problems and survey-type issues, while known defects, environmental matters and physical condition are excluded. It is not mandatory by law, but lenders usually require it, and Ontario lawyers must explain that it is optional and describe the alternatives. The Court of Appeal’s decisions show that coverage depends on the policy wording and the type of defect. LMS Lawyers can review the policy with you before closing.

Sources

This article is intended for general information purposes only and describes federal and Ontario law as of October 2026. It does not constitute legal advice and does not create a lawyer-client relationship between LMS Lawyers and the reader. For advice specific to your situation, please consult a licensed lawyer.