What is title insurance?

Title insurance protects a property buyer and mortgage lender against financial loss if someone later claims ownership of the property or if the title carries hidden debts, liens, or encumbrances that were not discovered before closing. Unlike other insurance policies that cover future events, title insurance protects against problems that existed before the purchase.

The policy is purchased with a single premium paid at closing. In Ontario, the buyer typically arranges title insurance as part of the purchase process, often with guidance from their lawyer. The title insurance company searches public records to verify ownership and uncover any claims against the property. If a covered defect is found after closing, title insurance will pay legal costs and any resulting losses up to the policy amount.

Your lawyer plays a key role in coordinating title insurance. They order the search, review the results for any issues, and arrange for the policy to be issued. While the lawyer's legal services and title insurance are separate, they work together: the lawyer addresses legal matters related to the transaction, while the title insurer backs up the property's ownership claim. Title insurance is particularly valuable in protecting against problems that a standard title search might miss, such as forged documents or unknown heirs with potential claims.