When buying a home in Alberta, title insurance is one of the least understood and most valuable parts of the transaction. It protects you against legal problems with ownership and title that can arise before and after you take possession.
What Title Insurances Does Cover
- The gap – In Alberta, there is a period of time between when the documents are signed and when they are registered with Alberta Land Titles. This window is referred to as “the gap”.
Title insurance protects you if something unexpected is registered on title during that gap — before ownership is formally recorded.
- Third-Party Interest Claims – if there is a claim of interest in your property that was not discovered at closing, which may include unknown rights, claims or defects that affect your ownership.
- Future Title Fraud and Forgery – one of the most significant protections. For example, Christopher owns a property with a clear title—there is no mortgage registered against it. Adam impersonates Christopher and applies for a mortgage, forging Christopher’s signature on the mortgage documents. Once the mortgage funds, Adam takes the money and disappears. Christopher is now left with a mortgage registered against his title.
In this situation, the burden is on Christopher to prove that fraud occurred. That process can be lengthy, expensive, and emotionally draining. A title insurance policy can cover:
- Legal fees
- Court costs
- Expenses required to establish that fraud was committed.
- Existing Liens not Known at Closing – undisclosed or unknown liens that exist at the time of purchase but were not discovered before closing – such as some Canada Revenue Agency claims.
- Encroachments – are often discovered through a Real Property Report. For example: a garage encroaching onto a neighbour’s property. If an encroachment creates a legal issue after closing, title insurance can cover costs or resolution.
- Mistakes on the Real Property Report (RPR) – if an error is found, title insurance offers protection. For example, structures are shown incorrectly, boundaries are misstated or improvements are missing or mislocated.
- Permit Issues – If work on the property was completed without permits, and this issue is not known before closing, title insurance may cover the legal and financial consequences, depending on the policy.
- Coverage Lasts as Long as You Own the Property – Title insurance is a one-time purchase and coverage generally last for the duration of your ownership of that property. It’s important to keep your policy documents on file until after you sell.
What Title Insurance Does Not Cover
- Things You Knew but Didn’t Disclose – If you were aware of an issue and didn’t disclose to the insurer, coverage may be denied. Examples include mold or radon in the home.
- Home Systems or Appliances – Title insurance protects ownership and title, and is not a home warranty, so it will not cover such things as furnaces, roofs, plumbing or electrical systems.
- Known Title Defects – problems that were already known and disclosed at the time the policy was issued are typically excluded.
- Environmental Hazards – such as soil contamination or environmental remediation costs.
- Native Land Claims – Any claims relating to Indigenous land rights are generally excluded from standard title policies.
- Zoning or Bylaw Violations You Create – Any changes or renovations you carry out as the owner which are in violation of zoning or bylaws, are not covered by title insurance.
Title insurance is a legal risk protection that helps purchasers manage potential risks that can be invisible at the time of purchase. It will span the lifetime of your ownership of the property.
