Title Insurance

Title insurance is a one-time premium insurance product that protects homeowners and lenders against losses arising from title defects, fraud, forgery, unknown encumbrances, and certain survey-related risks discovered after closing. In British Columbia, it has become increasingly common in residential conveyancing as an additional layer of protection beyond the land title registration system administered under the Land Title Act. Coverage terms and exclusions vary by insurer, so buyers should review the specific policy with their conveyancing lawyer or notary public before closing. It does not replace the need for a thorough title search or other due diligence steps in a BC transaction.

Title insurance can, in many BC transactions, be accepted by lenders in lieu of a current survey or real property report, since it covers certain survey-related risks such as encroachments and boundary discrepancies. However, title insurance does not physically identify the location of improvements on a lot, so buyers who want confirmed boundary information may still choose to obtain a survey independently. Whether title insurance is an adequate substitute for a survey in a specific transaction is a question best addressed with the conveyancing lawyer or notary. The appropriateness of this substitution depends on the property type, lender requirements, and the buyer's own risk tolerance.

Title insurance policies in BC typically cover risks such as title fraud, forgery of documents affecting title, unknown liens or encumbrances registered prior to closing, errors in public records, certain zoning or bylaw violations that existed before the policy date, and encroachments onto neighbouring properties or rights-of-way. Policies generally distinguish between owner policies and lender policies, with each covering different interests. Exact coverage terms and exclusions vary by insurer and policy form, so purchasers should carefully review the policy wording with their conveyancing lawyer or notary. Not all risks affecting a property are insurable, and known defects at the time of policy issuance are typically excluded.

Title insurance is not mandated by any BC statute, including the Land Title Act or the Real Estate Services Act (RESA), and its purchase remains voluntary for buyers. However, some institutional lenders may require a lender title insurance policy as a condition of the mortgage, which protects the lender's interest but does not protect the owner's equity. A separate owner's policy must be purchased if the buyer wishes their own interest to be covered. Buyers should confirm lender requirements and discuss the value of an owner's policy with their conveyancing lawyer or notary.

British Columbia operates an assurance-based Torrens land title system under the Land Title Act, which provides a high degree of certainty about registered interests and includes a statutory assurance fund for certain losses caused by registration errors. Title insurance complements this system by covering risks that fall outside the assurance fund, such as title fraud between registrations, off-title encumbrances, and certain survey issues. The two protections are not mutually exclusive and can coexist in the same transaction. Buyers should understand that registration of title at the Land Title Office does not on its own provide the same scope of protection as a title insurance policy.

Title insurance may provide some coverage for certain strata-related risks, such as undisclosed special levies registered against a strata lot prior to the policy date, but coverage varies significantly by insurer and policy. Under the Strata Property Act (SBC 1998, c. 43), buyers are entitled to obtain a Form B Information Certificate and Form F Certificate of Payment, which disclose known strata fees, levies, and bylaw contraventions; obtaining these documents reduces but does not eliminate all strata-related title risks. Title insurance does not substitute for thorough due diligence under the Strata Property Act, including review of depreciation reports, minutes, and the contingency reserve fund balance. Buyers of strata lots should discuss both title insurance coverage and strata document review with their conveyancing lawyer or notary.

Yes, fraud protection is one of the primary benefits of title insurance in BC, covering scenarios such as a fraudulent seller impersonating the true registered owner, forged discharge of mortgage, or fraudulent transfers affecting the chain of title. Given that BC's land title system, while robust, does not guarantee immunity from sophisticated fraud between registration events, title insurance fills an important gap. An owner's policy will generally cover the cost of defending title and any resulting loss if fraud is discovered after closing. Buyers concerned about fraud risk should discuss the specific fraud coverage provisions of a policy with their conveyancing lawyer or notary.

The Property Transfer Tax Act does not apply to title insurance premiums; Property Transfer Tax is calculated on the fair market value of the property interest being transferred, not on insurance products purchased in connection with the transaction. Title insurance premiums are paid directly to the title insurer, typically through the conveyancing lawyer or notary, and are a separate closing cost from Property Transfer Tax. Buyers should consult the BC Ministry of Finance or their conveyancing lawyer for current PTT rates and applicable exemptions, such as the First-Time Home Buyers' exemption (full exemption on properties up to $835,000 as of 2026). Title insurance costs are distinct from and in addition to any applicable PTT.

A lender's title insurance policy (also called a loan policy) protects the mortgage lender's security interest up to the outstanding loan amount and is often required by institutional lenders as a condition of financing in BC. An owner's title insurance policy protects the buyer's equity in the property for as long as they hold an interest in it, and the coverage amount is typically tied to the property's purchase price. The two policies cover overlapping but distinct interests, and purchasing a lender policy does not automatically provide any protection to the owner. BC buyers who want their own interest covered must purchase a separate owner's policy, usually at closing.

Under the Real Estate Services Act (RESA) and BCFSA guidance, BC real estate licensees must act in the best interests of their clients, but providing legal advice about title insurance — including recommending a specific policy or insurer — falls outside the scope of a licensee's authorized activities. Licensees may inform clients that title insurance exists as an option and direct them to their conveyancing lawyer or notary for a detailed explanation of coverage, exclusions, and suitability. Licensees must not misrepresent the nature or scope of title insurance protection, as doing so could engage RESA's conduct and disclosure obligations administered by the BCFSA. All substantive decisions about title insurance should be made with the guidance of the client's legal counsel.