What is Title Insurance and Do I need Title Insurance in Ontario it?
By Ali Shaikh
Lawyers acting for purchasers in Ontario are required as part of their responsibilities to advise their clients as to their options with respect to ensuring the title to their property. Clients may opt for a lawyer’s opinion on title or client may choose to purchase a title insurance policy from one of the various title insurance companies operating in Ontario.
If the client opts for a lawyer’s opinion on the title, after client’s transaction has been completed, the client will receive from Shaikh Law Firm an opinion as to whether the client has good and marketable title to client’s property. My opinion will be based on the title and off-title inquiries that I make on client’s behalf and the availability of an up to date survey showing the location of the buildings and boundaries. My opinion, of course, will be subject to the accuracy of the information that I am provided with from the various governmental offices, and the currency and accuracy of any survey provided to Shaikh Law Firm for review. Unlike a title insurance policy, which is discussed below, I cannot provide the client with any opinion or protection from losses with respect to title fraud. It is also not out of place to mention that off title searches can only go upto 50 years and upon considering the cost of title searches, it may turn out to be more expensive than obtaining Title Insurance. It is strongly recommended to get title Insurance since Lawyer’s opinion letter is subject to the information received by the lawyer.
Client’s other option is to purchase a title insurance policy. In that case, I do not provide the client with a lawyer’s opinion on title; instead, I give my opinion to the title insurer who in turn issues a policy to the client. A policy of title insurance will ensure client against losses resulting from the various covered matters in the policy-including the matters that I would otherwise be giving an opinion to client-such as (i) client’s title being defective or unmarketable because of someone else owning an interest in client’s title, (ii) outstanding liens, work orders or encumbrances, and (iii) realty tax arrears. There is also coverage for many survey related matters, including encroachments (other than fences and boundary walls) and violations of municipal set back requirements. With certain exceptions, such as for post-policy date title fraud, coverage for losses applies to the extent that these matters exist as of the policy date (being the date client’s Transfer is registered) but that are unknown to the client at that time.
In addition, the benefits of a title insurance policy include:
- acceptance by most lenders of a title insurance policy in lieu of an up to date survey (which is often required by a lender), therefore, saving client the cost of obtaining a new survey should client not require one for the client;
- coverage for loss or damage arising from many forms of title fraud;
- a no-fault claims process such that client do not have to demonstrate negligence in order to make a claim; and
- coverage for legal fees related to defending client’s interest in the title for matters covered under the policy.
As with all insurance products, title insurance does not cover defects which client are aware of prior to the closing of the transaction (such as adverse circumstances disclosed in a home inspection report or seller property information statement) or which client may have agreed to in client’s Agreement of Purchase and Sale. All policies are subject to exclusions and exceptions, including, but not necessarily limited to environmental matters and native land claims.
In the event that title insurance is obtained, there are a number of off title searches that I will not be performing as most losses related thereto that exist as of the closing date, but are unknown to the client at that time, are covered in client’s title insurance policy. The client will save the disbursement costs related to these off title searches. However, in certain circumstances, such as where the size of the property is important, or if the client is planning on adding onto an existing structure, or changes to the use of the property are contemplated, I recommend that certain off title searches be done even if title insurance is being purchased. If this is the case, please advise my office as soon as possible.
I am recommending that client’s transaction is completed by way of title insurance, and in the event that my firm does not hear from client to the contrary, I will be ordering a policy from Stewart Title Guaranty Company for closing. The client will sign an Acknowledgment confirming the manner in which client has chosen to ensure client’s title and confirming my right to disclose relevant information to the title insurer, in relation to client’s transaction, for the purposes of obtaining a title insurance policy.
Should client wish to discuss in further detail client’s options in this regard (including the option to purchase title insurance from another company) or if client wishes to receive a sample title insurance policy, please contact Shaikh Law Firm as soon as possible, a client’s decision will affect the manner in which I proceed with the client’s transaction.