Title insurance: what to ask before closing

Lender's policy versus owner's policy

Almost every Canadian lender requires a lender's policy, which protects the lender up to the mortgage balance and ends when the mortgage is discharged. An owner's policy is optional, protects your ownership interest usually up to the purchase price, and stays in force until you sell.

Title insurance is a single premium paid once at closing, with no annual renewal. A refinance usually needs a new lender's policy, so the cost can reappear in refinance closing costs.

Title is about ownership and registered interests

A property's title identifies legal ownership and can show interests such as mortgages, easements and other claims. Your lawyer reviews the transaction and relevant records to determine what must be addressed before closing. A policy is not a replacement for competent legal work or for understanding restrictions on the property.

Problems can involve unexpected title defects or claims, but the exact risks differ between properties and registration systems. Ask your lawyer what has been searched, what issues were identified and whether anything needs to be resolved rather than simply insured over.

Coverage follows the policy, not a general promise

Title insurance may cover certain title defects, fraud or other specified risks, depending on the insurer, policy and exclusions. It does not mean every boundary disagreement, renovation issue or known defect is covered. The wording and facts at the time of issue matter.

Ask for an explanation of exclusions, coverage amounts, who is insured and how a claim is made. Known problems may receive special treatment or be excluded. Do not assume a policy includes losses related to a future renovation, an unapproved use or a concern you did not disclose to your lawyer.

Lender and owner interests are different

A lender's policy protects the lender's insured interest and is not necessarily the same as a policy protecting the owner. Confirm which policy is being arranged and whether the owner has coverage. Paying a closing charge without reading the description does not establish what protection you personally receive.

Title insurance also differs from home insurance, which addresses specified property damage and liability risks. Both have conditions. Ask your lawyer and insurance adviser which policies are needed before funding and keep copies so you can identify the appropriate insurer if an issue arises later.

Consider Nova Scotia’s registration context

Nova Scotia's land-registration system has its own framework for registered ownership and interests. The province's consumer guide explains the registration process and government ownership guarantee associated with conversion. That framework should not be treated as identical to a private insurance policy or a guarantee covering every transaction problem.

Our brokers can identify a lender's closing requirements, while your Nova Scotia lawyer explains the title work and any proposed policy. Budget the actual premium and legal disbursements using the closing estimate rather than an online generic amount. Before signing, ask what protection applies to this property, what remains your responsibility and how the documentation will be stored.

How our brokers can help

Our brokers can review your mortgage questions, explain lender requirements and compare the options that fit your plans. Where legal, tax or investment advice is needed, we will help you identify the questions to bring to the appropriate professional before you commit.