The Use of Title Insurance in New Home Purchases
Revised March 5, 2003

Title Insurance is an old product which has only become popular in Ontario in the last four or five years. Since January of 1998, all lawyers acting for purchasers or mortgagors in Ontario have been obligated to discuss Title Insurance with their clients.

As the name implies, Title Insurance is an insurance policy on the title to your home. The premium is payable on closing. It is a "one time" premium which covers you for your entire period of ownership.

Title Insurance has a number of advantages over relying on a lawyer's certificate of title. Some of these are:

1. The Title Insurance policy covers defects not covered by a lawyer's certificate of title. For instance, it will insure you for defects in the survey which, on a new home purchase, the builder generally provides.
2. Title Insurance can actually save you money. In many cases, Title Insurance companies relieve your lawyer from the obligation to provide certificates relating to various matters dealing with title issues. As well, the title insurance company may simply absolve your 1awyer from the requirement that he or she perform certain searches. The savings that result from not having to get the certificates or do the searches usually exceed the cost of the Title Insurance premium.
3. If you discover you have a title problem, you need not locate and pursue the lawyer who certified title to you. If the problem is covered by your policy, you simply make a claim against the Title Insurance Company, leaving it to decide whether or not it pursues the lawyer who made the mistake.
4. The use of Title Insurance can assist in overcoming problems arising from the time constraints in new home purchases. With today's booming housing market, documents relating to the title to a new home are often not registered until fairly shortly before closing. This being the case, it is often difficult for the purchaser's lawyer to perform a full search of title and then obtain related clearance certificates prior to the closing date. If Title Insurance is used, the lawyer may not need to get these certificates. This allows the transaction to close on time with the purchaser still being protected for any problems that might have been disclosed by these certificates.

In summary, Title Insurance is a product which offers some attractive advantages to the new home buyer. You should be certain to ask your lawyer to discuss it with you.