What does title insurance cover? (2025)

Title insurance protects you against losses caused by problems related to the title of your property. 

It can be purchased when buying or refinancing commercial or residential property.

Whilst several types of owner’s title insurance are available on the market. The most common type is title insurance the owners purchase when buying a property. This type of title insurance offers you coverage up to the purchase price of the property. Some title insurance even offers higher coverage amounts to reflect the increase in the property’s value over time.

In this article we cover:

• What does title insurance cover?
• What is not covered by title insurance?
• How to claim against title insurance?
• Frequently asked questions about title insurance

What does title insurance cover?

Title insurance is designed to cover “title defects”. These are anything that clouds or challenges your legal ownership of a property. This is a very broad definition and as such, insurance providers will spell out in detail what their title insurance actually covers. 

Examples of risks covered include:

• Forged documents and fraud
• Liens against the property
• Easements or encroachments
• Disputes over property boundaries
• Pre-existing violations of subdivision laws or zoning ordinances

Forged documents and fraud

Title fraud happens when someone illegally transfers your home to themselves or takes out a mortgage on your property. To do this, criminals will create fake deeds, impersonate the true owners and even take out a new mortgage on the property without the owners knowledge.

​​Title insurance protects you by covering the legal costs and losses that result from fraud or forgery. For example, if a fake deed or fraudulent mortgage appears on your title after purchase, the insurer steps in to defend your ownership and restore clear title to your name.

Liens against the property

A lien is a legal claim registered against a property to secure payment of a debt. It differs from a mortgage in that, a mortgage is a voluntary agreement between a borrower and a lender, while a lien is usually imposed by law or a third party. For example, a tax authority seeking payment for an unpaid obligation.

Liens can come from many sources such as:

• Unpaid property taxes (municipal or school)
• Outstanding condo fees
• Unpaid utility bills
• Construction or renovation work that was never paid for (known in Québec as a legal hypothec of construction)
• Court judgements or unpaid loans secured against the property

When you buy a home, your notary checks for any liens in the Land Register. However, the notary will not be aware of liens not being recorded in the Land Register at that time. 

For instance, under Article 2726 of the Civil Code of Quebec, a construction lien can be created as soon as work is done or materials are supplied; however, the construction company has 30 days to register their debt.

Easements or encroachments

Easements and encroachments both involve how land is used, but they’re opposite in nature.

Easements are legal rights that allow someone else to use a portion of your property for a specific purpose. For example, Hydro-Québec might have access to maintain underground cables. On the other hand, encroachments are unauthorized intrusions where a structure from one property extends onto another, for example a balcony that crosses the property line without permission.

Easements or encroachments are recorded in your certificate of location however, these are sometimes improperly registered. For example, if you discover after purchase that your garage slightly overlaps your neighbour’s lot, title insurance covers the cost of resolving the issue or compensates you for any loss in property value.

Disputes over property boundaries

A boundary dispute arises when there is a disagreement over where the legal property line actually is. For example, two neighbours both believe a strip of grass belongs to them based on different survey plans. This can be caused by errors in surveys, outdated cadastral plans or unclear title descriptions. Title insurance covers the cost of defending property boundaries and compensates for any losses that arise from such disputes.

Pre-existing violations of subdivision laws or zoning ordinances

This type of issue doesn’t concern who owns the land or where the boundaries are, but rather what you’re legally allowed to do with the land or building.

In Quebec, every property must comply with municipal zoning and subdivision regulations. These are rules that determine things like the type of use that the property is zoned for (residential, commercial, mixed-use), building height, lot size, setbacks and distance between structures.

There may be pre-existing zoning violations that means the property was already non-compliant before you bought it, but no one knew. For example, an undivided duplex that was illegally converted into multiple apartments without permits. These are regulatory violations that can lead to fines, restrictions on renovations or even demolition orders.

Title insurance can cover the cost of resolving these problems or compensate you for loss in property value if the city forces you to correct or remove the offending structure.

What is not covered by title insurance?

While title insurance protects against hidden legal problems with ownership, it does not cover everything that can go wrong with a property. It’s focused on title defects, not the property’s condition or future issues that arise after purchase.

Common exclusions include:

• Most problems created after you buy the property
• Physical or structural defects
• Zoning changes made after purchase
• Environmental contamination
• Rights of parties in possession
• Native land claims
• Known title defects or problems disclosed before purchase
• Government expropriation

Most problems created after you buy the property

With a few exceptions title insurance is backward looking such as hidden liens, registration errors or past fraud. However, some “post policy” protections do exist. For example, if after purchase someone steals your identity and sells your mortgage without your knowledge. In this case title insurance will likely pay to restore your ownership and cover legal costs. Other examples of real estate fraud are listed on the Government of Canada official website.

Physical or structural defects

Physical or structural defects aren’t covered by title insurance. This is because they do not affect your legal ownership, they affect your property’s condition. To cover yourself against physical or structural defects you should consider getting:

• A home inspection before buying, to identify existing or potential structural issues.
• Home insurance after buying, to protect yourself against future damage or loss caused by events like fire, water infiltration or natural disasters. 
• Legal warranty (warranty of quality) to ensure the seller is responsible for any hidden defects that existed before the sale and weren’t disclosed.
• Latent defect insurance, to cover the repair costs or loss of value if hidden defects are discovered after the sale. Latent defect insurance can cover you even if the property was sold without legal warranty. This insurance can also protect sellers from future claims by buyers.

Zoning changes made after purchase

When you buy a property, title insurance guarantees that your ownership and use of the land comply with the laws and zoning regulations in effect at that time. If the municipality later changes its zoning by-laws for example, restricting short-term rentals or banning basement apartments, that’s a new legal situation, not a defect in your original title.

For example, in March 2025, the City of Montreal passed a new by-law that restricts short-term rentals of principal residences to the period June 10 through September 10 each year. Under the by-law, hosts must also obtain a municipal permit (about $300) and list the permit number on their platforms. Any rentals outside that period or without proper permit may face fines up to $1,000 or more per day. (Source, Short Term Accomodation | Ville de Montreal).

Because this type of change represents a new municipal rule introduced after you bought the property, it would not be covered by title insurance.

Environmental contamination

Environmental contamination isn’t covered by title insurance because it affects the physical condition of the land, not your legal ownership rights. 

Environmental contamination like soil pollution, buried oil tanks or hazardous materials, all fall under environmental laws and require separate inspections or environmental liability insurance. For example, if you buy a home and later discover an underground oil tank leak, the cleanup costs wouldn’t be covered by title insurance since the problem relates to the land’s condition, not its title.

Rights of parties in possession

“Rights of parties in possession” means someone else’s right to occupy or use your property, such as a tenant or long-term occupant. Issues arising from parties with these rights are not included in your title insurance. 

For example, let’s say you buy a property and there is a person living in the property under an unrecorded lease. In this case, to remove the person, you would need to file an eviction request at the Tribunal administratif du logement (TAL) (formerly the Régie du logement), obtain a judgement ordering the tenant to pay or vacate and potentially even pay a bailiff to enforce the order. None of this would be covered by your title insurance.

Native land claims

In Canada, all private land ultimately originates from the Crown (federal or provincial government). When you own a property, you hold title granted by the Crown and not by an Indigenous Nation. 

If after purchasing a property, an Indigenous group files a land claim, it is usually against the Crown’s original grant of title and not against individual property owners. Since these claims question the Crown’s authority to transfer the land in the first place, they are considered sovereignty or treaty issues and not private title defects. 

Title insurance companies can’t cover that risk because they are constitutional in nature and it’s beyond the insurer’s control or ability to resolve (only courts or governments can settle such claims).

Known title defects or problems disclosed before purchase

In Quebec, your notary must inform you of any title defects found during the title search before the sale closes. This disclosure is recorded in their official notarial file and sometimes referenced in the deed of sale or title report. Once a defect has been disclosed, it’s considered a known issue, meaning title insurance will not cover it if you proceed with the purchase.

Government expropriation

If the government decides to expropriate your land (for example, to build a road, metro line, or park), you are entitled to compensation under law, but title insurance doesn’t apply. This is because expropriation doesn’t mean your title was defective. It’s simply the state exercising its legal right to take land for public use (Act Respecting Expropriation).

An example of the Canadian Government expropriating a property in Quebec was published in Global News on October 7th 2025.

Conclusion: How to claim against title insurance

Title insurance protects you against hidden legal issues that could affect your ownership. This includes title defects such as liens, fraud,registration errors and so on. These problems can be expensive to resolve, often costing thousands in legal and notary fees. However, whether a specific issue is covered depends on the exact wording of your policy.

Before you buy a policy, you should ask the insurance provider for a sample policy or policy booklet from the insurer. These documents explain:

• Covered Risks i.e. what’s included in your title insurance policy
• Exclusions and Exceptions – what’s not covered by your title insurance policy
• Definitions and responsibilities of the insurer and insured

You can review this wording yourself or ask your notary to clarify anything unclear before finalizing your purchase.

Once your policy is issued, you’ll receive the full document (typically 10–15 pages) outlining the covered risks, exclusions and a Schedule A listing the details of your property such as the address, cadastral number, coverage date and policy number.

If something goes wrong later and you believe it’s related to your property’s title, contact your title insurer directly. Their legal team will review your claim against the policy’s covered risks and exclusions to determine if it applies.

If your claim is accepted, the insurer will appoint a lawyer or legal team from their network to handle the matter and cover the associated costs.

Since every claim is reviewed case-by-case, it’s wise to keep a copy of your policy readily available and consult your notary if you ever need to make a claim. 
A list of reputable insurance providers includes FCT, Stewart Title, or Chicago Title).