Existing Owner Title Insurance Policies in Ontario

If you own a property in Ontario, you may have heard of title insurance. But what is it and why do you need it? In this blog post, we will explain what title insurance is, how it works and what benefits it can offer to existing property owners.

What is title insurance?

Title insurance is an insurance policy that protects you, the property owner, from various title-related losses that are listed in the policy. Title refers to your legal ownership of the property. A title defect is a problem with the title that may affect your right to own or use the property.

Some examples of title defects are:

1.       Fraudulent or forged documents that affect your ownership

2.       Liens or encumbrances on the property that were not disclosed at closing

3.       Errors or omissions in surveys or public records

4.       Zoning violations or building permit issues

5.       Unpaid taxes or utilities by previous owners

Title insurance is not mandatory in Ontario , but it is highly recommended by lawyers and real estate professionals. It can provide peace of mind and financial protection for property owners.

How does title insurance work?

There are two main types of title insurance policies: Owner's Policy and Lender's Policy.

An Owner's Policy protects you, the property owner, from various title-related losses that are listed in the policy, for as long as you own the property. An Owner's Policy sets a maximum amount of coverage, usually based on the purchase price of the property.

A Lender's Policy protects your mortgage lender from losses due to defects in your title that affect their security interest. A Lender's Policy usually covers up to the amount of your mortgage loan at closing.

You only pay for title insurance once when you buy a property or refinance your mortgage. You can purchase title insurance through your lawyer when you close your transaction, and the price will depend on the value of the property being insured.

What are the benefits of an existing owner title insurance policy?

If you already have an Owner's Policy when you bought your property, you may wonder what benefits it can offer to you now. Here are some scenarios where having an existing owner title insurance policy can be helpful:

1.       You discover that there is a lien on your property that was not disclosed by the previous owner. Your title insurer will pay off or remove the lien so that you can sell or refinance your property.

2.       You find out that there was a fraud involving your identity or documents related to your ownership. Your title insurer will defend your interest and cover legal fees or losses arising from the fraud.

3.       You receive a notice from the municipality that your property does not comply with zoning regulations or building codes. Your title insurer will cover any costs to bring your property into compliance or compensate you for any loss in value.

4.       You learn that there are unpaid taxes or utilities on your property that were owed by previous owners. Your title insurer may pay off those debts so that they do not affect your ownership.

Of course, each risk and policy is different and subject to specific terms and conditions of your policy.

What if I don’t have a title insurance policy?

If you did not purchase a title insurance policy when you initially bought your property, it is possible to purchase an existing owner title insurance policy at any time you own the property. Most title insurance policies are ordered through a lawyer, who will perform a title search of the property and will assist with submitting the application to a title insurance provider.

Title risks and insurance can be complicated and legal advice relevant to each individual situation is crucial: if you have questions, please contact us to discuss.