What is title insurance and why do most lenders require it?

When you buy a home, you are purchasing ownership of the title to that property. Title insurance protects the title to your property against losses incurred as a result of undetected or unknown title issues. Many lenders require title insurance as it protects the lender from things like fraud, errors in surveys, encroachments onto neighbouring properties, zoning infractions and more.

Title insurance provides lenders with coverage for as long as they have a mortgage on the property and costs somewhere between $250 to $1000 depending on the value of your home.  The title insurance that is purchased for the lender does not cover your interests in the property.  If you are interested, you could investigate securing title insurance for yourself as well.  Your lawyer will arrange for this at the time of financing.