Title insurance

Title insurance is an insurance policy that ensures the validity and marketability of the title to a property on the closing date of the mortgage transaction or disbursement of funds. Title insurance protects against losses due to irregularities in the property title or certificate of location, or to fraud. A clear and good title means that the title to the property is correctly registered and that the property is free of any unknown encumbrances or liens.

Currently, the main companies offering title insurance and related products and services in Québec are First Canadian Title (FCT) and Stewart Title.

Generally speaking, title insurance provides mortgage lenders with the assurance that their collateral (the mortgage) is valid and enforceable. They will be indemnified according to the terms and conditions set out in the title insurance policy.

Owners also need to ensure that the title to their property is valid. They want to know that they will be able to sell their property in the future, knowing that title insurance will be able to remedy or pay compensation in the event of a title defect.

As part of the closing process, the notary will issue an opinion on title confirming that the buyer has a valid title to the property, subject to the buyer’s right to title. Title insurance provides additional protection against fraud or claims against the property that the notary cannot prevent. So, rather than relying solely on the notary’s opinion, both the lender and the owner benefit from the protection provided by title insurance.