One of the most common questions real estate lawyers in Ontario hear from clients is straightforward: “Do I need title insurance?”
It’s usually asked alongside other practical concerns like signing documents virtually, and as experienced real estate lawyer Mark A. Epstein puts it: “The answer to a lot of those questions are, ‘Depends on the bank.'”
But while your lender might drive the requirement, understanding what title insurance actually does – and why even lawyers buy it for themselves – can help you see why it’s often worth the investment.
What is Title Insurance?
Title insurance protects you from financial loss due to defects in your property’s title that weren’t discovered during the initial title search. Unlike other types of insurance that protect against future events, title insurance protects against problems that already exist but haven’t been discovered yet.
“Title insurance is both for the client and the bank,” explains Mark A. Epstein. This dual protection means it satisfies your lender’s requirements while also protecting your personal investment in Ontario’s competitive real estate market.
The Cost Reality: Manual Searches vs. Title Insurance
Many buyers wonder if they can skip title insurance and just rely on traditional title searches. Here’s the math that might surprise you:
“[With title insurance] we don’t have to go through 40 years worth of searches online and look at every document – which could be 50 bucks – but in a lot of cases, it’s an excess of a hundred. In some cases, it could be a few hundred,” notes Mark A. Epstein.
When you add up the cost of:
- Property tax verification certificates ($125+ from the city)
- Detailed document searches going back decades
- Verification of liens and encumbrances
- Professional time to review all findings
The title insurance premium is, in most cases, a one-time fee paid at the time of your purchase closing, and often costs less than doing comprehensive manual searches, while providing ongoing protection that a one-time search can’t.
What Title Insurance Actually Protects You From
Property Tax Discrepancies
“The number one claim to title insurance is discrepancy in the reported property taxes.” This happens more often than you’d think – municipal records aren’t always accurate, and you could face unexpected tax bills for amounts the previous owner should have paid.
Construction Liens
“[Title insurance] protects you from construction liens. So if the vendor sold you a house and they had somebody come in and fix things up before they left, and they didn’t pay them, that lien transfers to the new buyer.”
Imagine buying your dream home only to discover the previous owner owes $15,000 to a contractor who installed a new roof. Without title insurance, that bill becomes yours to pay.
Fraud Protection
While rare, property fraud does happen. Identity thieves can forge documents and sell properties they don’t own, or steal equity through fraudulent mortgages or sales.
Survey Issues and Boundary Disputes
Title insurance can cover costs related to boundary disputes, encroachments, and survey errors that weren’t caught during the purchase process.
The Claims Process: Why Lawyers Buy It Too
When title insurance pays out, the process is refreshingly straightforward: “The beauty of title insurance is they step in immediately within the week, pay you off, and they pursue the vendor. You do nothing. You just collect your cheque and move on with your life.”
This hands-off approach is why even real estate lawyers in Newmarket, Barrie, and Mississauga –who understand title searches better than anyone – choose title insurance for their own purchases. As Mark A. Epstein puts it: “I get title insurance when I buy a place because it’s peace of mind… If somebody defrauds you, if you’re that one in a million, and you go on vacation and come home and they sold your house, you’re protected.”
Making the Decision
Title insurance isn’t legally required in Ontario (except when your lender demands it), but it’s one of the few insurance products that protects against problems that have already happened – you just don’t know about them yet.
Consider title insurance if you want:
- Protection from unexpected costs after closing
- Peace of mind about property tax accuracies
- Coverage for construction liens from previous owners
- Protection against the rare but devastating impact of fraud
- A claims process that doesn’t require you to become a legal expert
For most homeowners, the relatively small upfront cost provides valuable protection against potentially large financial losses. When even experienced real estate lawyers choose to buy it for themselves, that tells you something about its practical value.
Contact us at Epstein & Associates PC to discuss whether title insurance makes sense for your specific property purchase in Ontario and to understand how it fits into your overall closing costs.
