What’s not covered by title insurance?

By FCT

Jen and Henry* saved up for years and finally bought a house, even though it needed a little work. They considered themselves pretty handy and to save a few bucks, they decided to do the renovations themselves. While demolishing walls, they found that mould was growing in the guest bathroom. Jen was distraught at the thought of spending more money to clean up and fix the issue, but Henry was not. “It’s not a problem,” Henry said. “We’ve got title insurance!”

Unfortunately, Henry, like many others, didn’t understand what title insurance covers. While title insurance does cover renovations and repairs that are enforced by the local municipality due to work that previous homeowners did without permits, it does not include all repairs.

We often get claims that are more suited to home insurance. For example, Michelle and Jake*, title insured homeowners, noticed that the carpet in their basement was wet and they could see water coming in from the side of the house. They found a crack in the foundation wall where the water was coming in. Had the previous homeowners finished their basement without a permit which caused this issue, title insurance would likely have covered it if the municipality required the removal or repair because it was done without a permit. However, since this was not the case, we were not able to pay out the claim.

Other claims that are not covered by title insurance (but may be covered by home insurance, depending on your policy) are a leaking roof, fire or weather damage, infestations, etc. Title insurance protects your ownership of the home and covers unknown issues like fraud, forgery, encroachments (if your shed turns out to be on your neighbour’s property or vice versa), previous homeowner’s lack of building permits, and more.

If you’re ever in doubt, feel free to call us to confirm your coverage!

*Names were used for illustrative purposes and have been changed to protect the privacy of our clients.

This is for general information only. For specific coverage, please contact your title insurer or home insurance company.

Categories: Title Insurance

43 Responses to “What’s not covered by title insurance?”

  1. Nneka Isibor says:

    Does title insurance protect you from contractor fraud? We hired a contractor to flip a house we bought and he left the job without finishing the job. And even made it worse.

  2. Carla says:

    My basement wall is leaking. The basement is unfinished and I noticed cracks at all the corners of the floor. These are not leaking but I’m afraid it’s only a matter of time that they leak because of the wall. Is fixing the leaking wall covered by title insurance. I have a feeling it has leaked previously because the previous owner had things stacked up in front of that wall when we had the home inspection done.

    • FCT says:

      Hi Carla, unfortunately there is no specific coverage for leaking basements in a title insurance policy. Amongst other things the policy contains coverage for outstanding work orders, open building permits and the forced removal and remediation by a governmental authority because of work done without a required building permit. If you’d like us to investigate this for you, please visit the “Make a Claim” section of our website and we’d be happy to help!

  3. Scott says:

    We recently purchased an older home.. we removed the glass sliding doors on the bathtub and found mold in behind the tub surround. It appears the home owner did the tub surround. Is this something title insurance would cover.

    • FCT says:

      Hi Scott, sorry to hear that. Unfortunately there is no coverage for mold specifically in the title insurance policy. As we mentioned in our previous comment, the policy contains coverage for outstanding work orders, open building permits and the forced removal and remediation by a governmental authority because of work done without a required building permit, in addition to other coverage. If you’d like to submit a claim, please visit the “Make a Claim” section of our website and we’d be happy to help!

  4. David Cameron says:

    How about paint used to cover up an existing ceiling mould problem and within 2 months after purchasing the residence, the mould is now leaching through the paint revealing itself to the bedroom areas. Seems like it is some what fraudulent to hide and not disclose the problem. Is this something title insurance would cover?

    • FCT says:

      That’s a tough situation, David. Unfortunately this type of fraud is not covered by title insurance. Our policy includes coverage for title fraud where the ownership or title of a property is fraudulently changed or documents are forged to illegally sell or refinance the property. Have you spoken to your home insurance company? We’d recommend that you check with them about your coverage. If you would like a definitive coverage position from us, you could submit a formal claim at https://fct.ca/make-a-claim/.

  5. Moi says:

    How does Title Insurance work for a residential rental property? A former renter left without notice and their own brand of home renos seem shoddy at best. Second hand appliances were ‘patch worked’ installed and our kitchen counter tops and cabinetry were altered and damaged in the process. An attempt to replace the bathroom floor was made, but incomplete and now the toilet leaks. I could go on, but it would be depressing. I was not aware that these alterations were being made or attempted until after the renter was long gone. This was our home before we decided to rent it out and we are guessing that the flooring was also replaced by the previous owners prior to us moving in. If we have to do a proper reno on the kitchen, would Title Insurance cover that, new flooring, cabinetry, toilets….etc?

    • FCT says:

      Hi Moi, sorry to hear that. There isn’t a significant difference on how a title insurance policy works on a residential rental property as opposed to an owner occupied property. The policy contains coverage for the costs of correcting work done without a required building permit if the insured is forced by a governmental authority to correct it. However the coverage only applies to work done before the insured becomes an owner of the property. Have you spoken to your home insurance company? We’d recommend that you check with them about your coverage. If you want a definitive coverage position from FCT, you could submit a formal claim at https://fct.ca/make-a-claim/

  6. Nicole says:

    Does title insurance cancel itself out if you bought the house ‘as is’?

    • FCT says:

      Hi Nicole,
      A residential owner’s policy has an exclusion to coverage for things agreed to by the insured, but the mere fact that an agreement says the house is being purchased “as is” will not in and of itself lead to an exclusion of coverage. We sometimes see agreements of purchase and sale (especially in the context of foreclosures or powers of sale) that say the purchaser agrees to accept things like work orders, open permits or lack of permits, and if this is the case, this could lead to an exclusion of coverage. Like all insurance policies, there are exclusions to coverage to coverage in a title insurance policy, but the specific wording of the agreement of purchase and sale is very important and each case is decided on its own particular facts.

  7. Shanna Cruz says:

    The previous owner made a bathroom renovation and did not put a heating vent. We also have a window in the bathroom, and we have noticed that moisture is building up every time we take shower. I have requested to the City if there is any permit requested prior to the renovation. If there is none, does title insurance cover for fixing the bathroom?

    • FCT says:

      Hi Shanna,
      Covered Risk 24 of the residential owner’s policy provides coverage when “You are forced by a Governmental Authority to remove or remedy your existing structures or any part of them, other than a boundary wall or fence, because any portion of your existing structures was built without obtaining a required building permit from the proper Governmental Authority office.” This coverage is expanded in western Canada to also include situations where permits have not been signed off. If your situation falls under this and you believe you have a claim, please see the “Make a Claim” section of our website.

  8. Tim says:

    My wife and I recently got an offer accepted on a property. The closing is soon. The property was purchased to build a family home. We decided to perform a survey of the lot prior to closing. The survey revealed significant encroachment from one of the adjacent neighbours. We would like to approach the seller about a price abatement given this fact and the impact on our build. The encroachment is approximately 5%. Therefore, we will be requesting 5% of the purchase price + legal fees as an abatement. We are concerned that the seller won’t budge on price. Assuming the seller has Title Insurance, is this something they can try claim back from their title insurance company given they were unaware of this fact when they bought the property.

    • FCT says:

      Hi Tim, generally speaking a title insurance policy insures against matters that would have been disclosed by an up to date survey. Assuming the sellers have a policy of title insurance, they should immediately submit a claim to their insurer. Because there is an on-going transaction, we would recommend that your lawyer raise the survey issues with the sellers’ lawyer.

  9. Jone says:

    Hi, I need some advice here. I try to sell my property with a Realtor and it turns out this Realtor was forwarding private information she learned from my property to the city. Instead of trying to sell my property she back stab me with lies and manipulations which now put me in trouble with the city threatened to put charges on my property if I don’t do what the city want me to do on my property. Yes I am facing a big mess from this Realtor.

    I don’t have mortgage on my property so the title is clear no mortgage. My question is do I have to buy this title insurance if my property has no mortgage on the title? Can someone like the city or a Realtor change things on the title and take my property without me knowing? How to find out the real information on a property if someone recently change the title? Thank you.

    • FCT says:

      Hi, sorry to hear you are having trouble. The issues raised in your post about your realtor are outside the scope of title insurance. If you have concerns about her behavior, you should consult the provincial regulator. Concerning your question about buying title insurance if a property has no mortgage on title, this can certainly be done and is a good idea. FCT offers a product we call an existing homeowner policy. For more information, please give us a call at 1.877.888.1153. Thank you.

  10. KD says:

    I purchased a property several years ago that had many known defects. These were obvious/ discovered / discover in Our home inspection.

    Over the three years that we have owned the property we have made many upgrades to resolves these known issues at our own expense including upgrading wiring, replacing a furnace and resolving issues with asbestos ducts and lack of ducts in some parts of the house. We also waterproofed a portion of the foundation from the outside.

    We have recently gutted the interior basement walls and found that there are major structural issues with the foundation. They seem to stem from the area where a previous owner opened the foundation to create a basement entrance and windows. It is unlikely that a permit was acquired to complete this work and it is obvious that at the very least these obvious structural defects (a large hole in the foundation wall for example) were visible and covered up by framing and drywall (also without permit). This is particularly obvious because th most glaring hole was stuffed full of insulation.

    What evidence would I need to seek a title insurance claim for this work?

    • FCT says:

      Hi KD,
      A residential owner’s title insurance policy provides coverage for losses when you are forced by a governmental authority to remove or remedy any part of your building because it was constructed without a required building permit. You can submit a claim on-line at https://fct.ca/make-a-claim. Just follow the instructions on our website. We will ask to see certain documentation like the agreement of purchase and sale and home inspection, but the claims handler reviewing your claim will guide you through the process.

  11. Christie says:

    Hello! We recently purchased our first home and discovered the previous owners took out a load baring wall without permits and also closed sealed up the air circulating vents in the bedrooms. Would this be covered?

    • FCT says:

      Hi Christie,
      Our residential owner’s policy provides coverage when “You are forced by a Governmental Authority to remove or remedy your existing structures or any part of them, other than a boundary wall or fence, because any portion of your existing structures was built without obtaining a required building permit from the proper Governmental Authority office.” If you believe you have a claim, please visit the “Make a Claim” section of our website, and we’ll be happy to help!

  12. Bruce says:

    We bought a condominium in 1982 and got title insurance much later around 2005/6. In 2017/18, a design flaw in the original construction of the underground parking was found by the Condo Board. This has resulted in a special assessment for all owners in 2019 and 2020 to bring the parking area up to code. Would the special assessment be recoverable under the title insurance, under any circumstances?

    • FCT says:

      Hi Bruce, unfortunately, it would likely not be covered as the policy obtained in 2005 or 2006 would have a policy date of the original acquisition in 1982. The special assessment coverage that the policy provides is for situations in which at the time of purchase, the condo corporation knew of an issue and failed to disclose it. In this particular case, as the defect was only discovered about 36 years after the acquisition of the unit, it would likely not fall under the coverage. If you would like a definitive coverage position from us, you can always submit a formal claim at https://fct.ca/make-a-claim/.

  13. Karen says:

    Hi there. We bought a property with a pool which we thought complied with bylaws in regards to pool fence height. Now we find that we do not have compliance with the city or the insurance company and we need to install a higher fence. Would title insurance cover this?

    • FCT says:

      Hi Karen, is the municipality forcing you to install a higher fence? The residential owner’s policy provides coverage when “You are forced by a Governmental Authority to remove or remedy your existing structures or any part of them, other than a boundary wall or fence, because any portion of your existing structures was built without obtaining a required building permit from the proper Governmental Authority office.” If your situation falls under this and you believe you have a claim, please see the “Make a Claim” section of our website.

  14. Kim says:

    We bought a house with possible water damage. There was nothing too concerning when we looked at it, and in our inspection it said “the buyers should monitor back room downstairs for possible water damage” After we bought the house and moved in and all the belongings were cleared from said room, we noticed how soft the floor was and also noticed a black pipe sticking out of the floor(previously covered by piles of boxes). It was winter so we started renos on the main rec room and figured we would start on that room in the spring since the thaw would hit and we would for sure notice any water coming in at that time. The floor was completely rotten and wet at the very bottom layer. Then we ripped off 2 layers of drywall to find a 3 inch UNSEALED pipe sticking out of the cement wall. Who would put drywall over an unsealed pipe face?
    So when the thaw hit, low and behold here comes the water. My husband ran to the hardware store and bought a pump, timer and garden hose so we could pump the water out the window to our side yard so wouldn’t flood our basement. Makes you wonder what happened to the water in years past. So now we have a room and furnace room completely gutted with 2 pipes from the unknown(one in florr one in wall) and a wet floor and wet walls and told $30 000 to fix. And that is not the cost of finishing the rooms. Just to dig up our yard, add weeping tiles and seal the cement walls. And we are told not covered by title insurance. How can that be?

    • FCT says:

      Hi Kim,
      Sorry to hear about your situation. Have you checked if this is covered under your home insurance policy? Title insurance is different from home insurance in that it covers you from title and certain off-title risks. For instance, if you are forced by a governmental authority to remove or remedy your existing structures or any part of them because the work was done without permits, that could be considered a covered risk. There are around 33 risks including fraud and survey errors that are usually covered by title insurance, you can refer to your policy to see the specific coverage. If you’d like a definitive response to your situation, please see the “Make a Claim” section of our website.

  15. Ann Marie MacLellan says:

    WE purchased our home and were not advised our home is on a private road. Now that work is required on the drainage system to bring it out of 1960 we were advised by the municipality that it will be at he cost of the residents not the municipality for this upgrade. Does title insurance assist us on this since clearly no survey or search was done and we the residents are being held accountable on this upgrade? Again we were never told we would be accountable for upgrades on our street??

    • FCT says:

      Hi Anne Marie, sorry to hear about your issue. While legal access to a property is typically covered by a title insurance policy, unfortunately, the costs to maintain a private right-of-way or road are not covered under the policy. That said, if you’d like us to fully investigate your inquiry for possible coverage, please visit the ”Make a Claim” section of our website and we’d be happy to review your documents and particular situation.

  16. Mari Peters says:

    We bought a condo with an enclosed balcony maybe sept 2018.
    the condo board association vote, approved and told all other condo owners they could have the same if they chose. No one else did, only ours. we understood we would be responsible for cost of repairs, removal, and replacing.
    Months later the association began to engage in renovation plans for the entire building.
    We had balcony enclosure inspected by engineers and we need to take it down to do renovation on balcony, all balconies need renovation.
    The board president and the board (my husband was elected to be a board member) told my husband he needed board approval to put the enclosure back up and they will NEVER approve. Condo owners told us the president has fought with them and the two prior owners over the enclosure. We had no idea before buying any of these things. Nothing was disclosed to us.
    We bought it with the enclosure, there is no rule or law that says we need approval again…we have a lawyer, he said the laws are on our side. But today he wrote that we need approval to put it back up. It was already approved with the written agreement that if it had to come down we pay for it. It’s already approved.
    We paid a much higher price for this condo because it included the balcony enclosure.
    My girlfriend’s condo association just now went thru balcony repairs and had to pay to remove hers and put it back up…no approval because it was already there and was approved and met codes. Just like ours and same balcony enclosure company that installed ours.
    Does title insurance fight for us.

    • FCT says:

      Hi Mari, that sounds frustrating! A title insurance policy provides protection against losses for matters insured against as of the date that you became the owner of the property. The condo board’s recent decision not to permit the reinstallation of your balcony enclosure would likely not be covered by the policy. That said, if you have additional information that you would like us to review and investigate further, please visit the “Make a Claim” section of our website and we’d be happy to help!

  17. Kathleen says:

    I purchased my house in May 2019. We were advised during our home inspection that the deck would need new sonotubes and the floor resurfaced, but was in otherwise good condition. The sonotubes were not dug deep enough and the frost has shifted the deck to the point of leaning posts. The deck is a second story L shape deck measuring 28 x 18 at it’s longest edges and it bolted to the house. After multiple contractors came, said they would do the work and than disappeared, we had one come and tell us there was no way a contractor would fix those things because the deck is not built to code and he would be surprised if it was built with a permit.

    We contacted the city and were told that in fact, no permit was ever requested for this deck, The deck was built ten years ago after the original deck fell off the house and damaged the septic line causing a back up. The work was all done through a home insurance claim.

    The city I live in refuses to inspect the deck or tell me to take it down, but will confirm in writing that it was built without a permit

    Will title insurance cover this for the lack of permit work even though the city is not demanding it be taken down? If not, what other proof could I obtain that this is not a sound structure as was originally presented in the sale of the home?

    • FCT says:

      Hi Kathleen. A title insurance policy affords protection against the enforced removal of a structure due to construction without a permit, but it doesn’t appear that your issue would fall under the policy. That said, we would be happy to review your documentation to see if coverage might be available under a different covered risk. If you want us to proceed with this review, please visit the “Make a Claim” section of our website.

  18. Phil says:

    I have a question related to encroachments. I bought my property and after 20+ years I’ve discovered that part of my driveway and a portion of a fence is actually on my neighbours property. My neighbour is not willing to sell me that portion of their property or agree to an easement.

    I’ve read above that title insurance covers situations like finding out your shed is on a neighbours property … but what does that coverage actually mean? Does it mean the title insurance may cover the costs of altering my driveway and moving the portion of the fence that is technically on my neighbours property? If my neighbour was willing to sell the portion of their property, would title insurance cover that cost? If my neighbour was willing to agree to an easement, would title insurance cover the cost of registering the easement?

    Just looking for clarification of how title insurance might help in my case. Thanks for your help.

    • FCT says:

      Hi Phil, a residential owner’s policy covers losses if you are forced to remove or remedy an existing structure because it encroaches onto adjoining land. In all parts of Canada except western Canada, the wording of the policy makes a specific exception for encroaching boundary walls and fences. In western Canada, most residential owners’ policies contain a “Boundary Wall and Fence Endorsement” which takes away the exception for boundary walls and fences. If you’re insured by FCT, you can visit our Make a claim section to provide formal notice of your claim according to the terms of your policy. Hope that helps!

  19. Samantha says:

    Hi there, we bought a house back in Nov 2018 .. we found water damage in the basement when we went to do renos, we fixed that and realized it was coming somewhere from the front of the house. this past weekend we dug out the front of the house and realized when the mudroom was built from whoever built it that they did not build it probably .. they used wood for the foundation and left holes where the water is leaking into the basement .. this mudroom was definitely not build properly and now we have to tear it down fix the leaking and the do it properly. would this be covered under our title insurance?

    • FCT says:

      Hi Samantha. A residential owner’s policy contains no specific coverage for improperly built structures. However, there is coverage if you are forced by a governmental authority to remove or remedy something if it was built without a required building permit and coverage for work orders that existed on the policy date and open permits that were in existence when you bought your house. If you would like a formal coverage position on a claim, please visit the make a claim section of our site. Thanks!

  20. Phil says:

    Thank you.

  21. Michelle says:

    Hi we bought a property 7 years ago. We have since decided to sell the property. It has now come to light that the house required approval from a conservation authority and that approval was not given. In addition, the entire property is located in hazard lands which means the conservation authority has complete control over what you do with the property. Because of this, the property is unmarketable and we cannot sell it. Does this sort of situation fall under our title insurance policy?

    • FCT says:

      Hi Michelle, to get a formal coverage position for your particular situation, you’ll need to submit a claim on our website. However, in general, the residential owner’s policy has two areas of coverage related to conservation authorities. Covered Risk 25(c) covers losses when “You are forced to remove or remedy your existing structures or any part of them, other than a boundary wall or fence, because they are located on land under the jurisdiction of a conservation authority or similar Governmental Authority without approval” and Covered Risk 17(c) covers losses when “Another person would be permitted to refuse to perform a contract to purchase, lease or make a Mortgage loan because your existing structures or any part of them are located on land under the jurisdiction of a conservation authority or similar Governmental Authority without approval”. Hope that helps!

  22. Adrian says:

    There are ground windows in my house that weren’t on the blueprints which the previous owner poorly covered over outside and in. Reviewing our title insurance was suggested but I’d like to know if it would be something that would be covered as the job was done by the previous owner.

    • FCT says:

      Hi Adrian, a homeowner’s title insurance policy contains coverage for the costs of correcting work done without a required building permit if the insured is forced by a governmental authority to correct it. However, we can’t be sure if your situation falls under this. For a formal coverage position, please submit a claim at https://fct.ca/make-a-claim/.

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