Do you actually need title insurance in Ontario?

No law makes you buy it, but your lender can require it. The one-time premium runs $150 to $350, and Ontario's public fund pays only as a last resort.

Nothing in Ontario law requires a homeowner to carry title insurance. Your lender can require it, and that is why it appears on almost every closing statement in the province. The premium is small next to the rest of a closing, and what it buys is narrower than most buyers assume.

Do you have to buy title insurance in Ontario?

No, not as an owner. The requirement, where there is one, comes from the mortgage rather than from the law. The Financial Consumer Agency of Canada states it plainly: "Your lender may require you to get title insurance as part of your mortgage contract." (Financial Consumer Agency of Canada)

There are two policies and they protect different people. Lender title insurance, in the agency's words, "protects you until you pay the mortgage in full". Homeowner title insurance "protects you as long as you own the home", with or without a mortgage on it.

If you are financing, the policy your lawyer arranges is usually the lender's. Whether you also take the homeowner policy is your call, and it does not have to be made on closing day. The agency notes that if you do not buy title insurance right away, you may buy it later.

What does title insurance cost in Ontario?

A one-time fee, based on the value of your home. The Financial Consumer Agency of Canada puts the range at "between $150 and $350 but could cost more". There is no renewal and no monthly cost. It is sold by lawyers, title insurance companies, insurance agents and mortgage brokers, and on a normal residential purchase your real estate lawyer arranges it along with everything else. Our guide to closing costs in Ontario sets out where it sits among the other closing day items.

What does title insurance actually cover?

Title fraud is the headline risk. The federal agency describes it as a fraudster stealing the title of your home and then selling the home or applying for a new mortgage against it. Its list of ways to protect yourself from real estate fraud ends on this one: "consider buying title insurance to protect yourself against losses from title fraud". (Financial Consumer Agency of Canada)

What a policy covers beyond fraud varies between insurers and between policies. So the question worth asking your lawyer is not what title insurance covers in general, it is what this policy excludes. Ask for the exclusions before you sign, not after.

Ontario has a public compensation fund. Is that not enough?

It is real, it pays, and it pays last. The Land Titles Assurance Fund was created under the Land Titles Act to compensate people for, in the province's words, "certain financial losses they incur due to real estate fraud or omissions and errors of the land registration system". (ServiceOntario)

Section 57(4) of the Land Titles Act sets the conditions, and they are tighter than most owners expect:

1. You were wrongfully deprived of land, or of an estate or interest in land, because the land was brought under the Act, because a fraudulent instrument was registered, or because of a misdescription, omission or other error attributable to a land registry office.
2. Where the loss came from a fraudulent instrument, you have "demonstrated the requisite due diligence as specified by the Director".
3. You are "unable under subsection (1) or otherwise to recover just compensation" for your loss.
4. You apply inside the time limit.

The third condition is the one that changes the maths. The fund sits behind every other route of recovery, so it is what you reach for after the others have failed. A title insurance claim starts with the insurer.

The limit is six years. The Act requires an applicant to "make an application within six years from the time of having suffered the loss", and the province says the same in plainer words: "applications must be made within 6 years of suffering the loss".

Claims go to the Director of Titles. A hearings officer reviews the application, decides whether it meets the requirements of the Act and what compensation is payable, and may hold a hearing if the claim cannot be paid in full. Where a case of fraud is straightforward and everyone cooperates, the province says title can be returned and a compensation decision made within 90 days.

How much does the fund actually pay out?

Less than most people assume. Ontario publishes the fund's annual payments as open data, and the published series runs from 1993 to 2017. The last year in it, 2017, records $56,501 paid out across the entire province. The heaviest year in the series is 2002, at $2,160,549. (Ontario Data Catalogue)

Those are provincial totals for everything paid in the year, not a cap on any single claim. They are still worth looking at before treating the fund as a reason to skip a policy.

What should you ask before closing?

Four questions, and your lawyer can answer all four in one reply:

1. Is the lender requiring title insurance, and is the quote for the lender's policy, the homeowner's policy, or both?
2. What is the premium on this purchase?
3. What does this policy exclude?
4. If I skip the homeowner policy now, what does it cost to add later?

What if you think you are already a victim of title fraud?

The province sets out the order. Report what happened to your local police department, tell your lawyer or adviser, and contact your local land registry office or the Director of Titles. After that, a security freeze with Equifax Canada and TransUnion Canada is free, and it restricts disclosure of your consumer file for things like a new mortgage on your home. (ServiceOntario)

The province's own page ends on the same advice: "Talk to your lawyer or advisor about alternative methods of protecting yourself, including the benefits of purchasing title insurance."

If you are working out what closing will cost you before you sign anything, start with our closing costs guide, and tell us what you are looking at on our buying page.