Buying a home or investment property in Alberta is an exciting milestone, but the stack of documents and unfamiliar terms that come along with it can feel daunting. Among those details, one safeguard that buyers are asked to consider is title insurance.

Imagine this: years after moving into your new home, you discover that the previous homeowner built a deck without a permit, and now the municipality is requiring costly changes to bring it up to code. Or perhaps you learn that a small portion of your garage actually encroaches onto a utility easement. These are real situations where title insurance can protect you from unexpected expenses and legal headaches.

Understanding what title insurance is, when it applies, and how it safeguards your home ownership can make the closing process smoother and give you peace of mind long after you get the keys.

How Title Insurance Protects You

Alberta uses a land titles system that records property ownership along with interests that can affect how the land is used. These may include easements, restrictive covenants, mortgages, utility rights-of-way, and encroachments. But not every issue is visible or properly recorded. Sometimes structures like garages, fences, or decks extend over a property line, or past renovations weren’t built to code and only come to light when the municipality inspects or demands corrections.

In other cases, errors in the land title record, or even fraud, such as identity theft or forged documents, can threaten ownership. Title insurance protects you against many of these hidden or unexpected problems, covering risks that may not be caught in a standard review and shielding you from costly surprises after you purchase the property.

Unlike home insurance or car insurance, there is no annual renewal. It is a one-time, relatively small fee for the buyer that’s purchased through your lawyer at the time of closing and covers you for the entire duration of your home ownership.

Some people hesitate to purchase title insurance because the odds of needing it are admittedly somewhat low, yet if a problem does arise, having coverage can save you tens of thousands of dollars or more.

Types of Title Insurance

There are two types of title insurance policies: lender and owner. These title insurance policies cover slightly different risks, as follows:

• Owner’s title insurance: This policy protects the homeowner. Coverage usually lasts as long as you own the property and is typically based on the purchase price. It is designed to compensate you if a covered title problem causes you a financial loss, and to pay costs to fix insured title issues.
• Lender’s title insurance: This policy protects the mortgage lender. Most banks/lenders require this policy as a condition of advancing funds for a mortgage. It is designed to protect the lender’s interest in the property for the amount of the mortgage.

Title insurance does not replace legal advice or due diligence. Your real estate lawyer still reviews the title, explains registered interests, requests necessary changes, and searches for information that could affect value or use. Title insurance is more of a safety net beyond the due diligence your real estate lawyer performs, not a substitute for that due diligence.

What Title Insurance Covers

Policies are contracts, so exact title insurance coverage depends on the insurance company and the wording. That said, the following items are commonly included in standard residential owner’s policies in Alberta.

• Unknown Title Defects: Coverage for pre-existing errors in the land title, such as mistakes in legal descriptions, missing signatures, or undisclosed interests that could affect ownership rights.
• Survey and Real Property Report Issues: Protection against certain pre-existing survey or Real Property Report (RPR) discrepancies, such as structures built too close to property lines or setbacks that weren’t compliant when you purchased.
• Encroachments: Coverage for the cost of legal resolutions or compliance if a neighbour’s fence, garage, or structure encroaches on your property (or yours encroaches on theirs).
• Municipal Permit and Work Order Problems: If past renovations were done without proper building permits, or with code violations, and the municipality later requires expensive corrections, title insurance may cover those costs, provided the issues existed before you purchased the property.
• Unpaid Existing Liens or Taxes: Coverage for unpaid property taxes, utility charges, or builder’s liens that were attached to the property before closing but weren’t disclosed during the transaction.
• Title Fraud: Protection if someone impersonates you or previous property owners to create a fraudulent mortgage to sell, or transfer the property. Title insurance covers financial protection and legal costs to restore rightful ownership and remove fraudulent claims.
• Legal Fees to Defend Ownership: If a third party challenges your ownership or claims an interest in your property, title insurance typically pays for the legal costs to defend your title.
• Registration Gap Coverage: During the period between closing and official registration at Alberta Land Titles, the policy may cover losses caused by a third party registering an interest on title before your ownership is officially recorded.

Again, title insurance coverage is policy-specific. Always review the title insurance policy and ask your lawyer to point out the inclusions and exclusions that matter for your property type.

What Title Insurance Policies Do Not Cover

Just as important as understanding what is covered is understanding what is excluded in your insurance products. Common exclusions include the following.

• Known Issues Before Closing: Title insurance is designed to protect buyers against unknown risks. If you were aware of a problem before closing and did not disclose it to the insurer, that issue will not be covered under your policy.
• Physical or Structural Defects: Title insurance only covers legal ownership and certain compliance risks. It does not address physical or structural damage, maintenance problems, or normal wear and tear. A proper home inspection and property insurance policy are still essential for new homeowners.
• New Problems Arising After Closing: The policy only covers issues that existed before or at the time of purchase. If you make changes to the property after closing, such as building an addition without a permit, and later face a work order, that risk falls outside your coverage.
• Future Zoning or Bylaw Changes: Title insurance protects against certain pre-existing zoning or compliance issues, but does not cover changes to bylaws or zoning regulations that occur after you take ownership.
• Environmental Hazards and Contamination: Problems such as soil contamination, hazardous materials, or environmental cleanup requirements are typically excluded from title insurance coverage.

Your policy will include schedules that list registered interests or issues the insurer will not cover.

Is Title Insurance Necessary in Alberta?

There is technically no law that forces you to buy title insurance in Alberta. However, if you want a mortgage, lenders will often require it. By lowering their risk with title insurance, your lender is able to offer a lower rate to prospective buyers than they’d be able to without it.

Many buyers choose to purchase title insurance because it is a relatively affordable one-time fee, provides coverage for as long as you own the property, and protects against risks that are difficult or impossible to detect beforehand.

How Much Does Title Insurance Cost in Alberta

Title insurance premiums are a one time cost paid at closing or when the policy is ordered. There are no annual renewals for an owner’s policy. Premiums vary by insurer, property type, purchase price or mortgage amount.

For a typical residential home or condominium in Alberta, an owner’s policy often falls in a general range of around a few hundred dollars, commonly in the $200-$400 range. A lender’s policy is usually priced separately based on the mortgage amount and often falls in a similar or lower range, especially when ordered at the same time as an owner’s policy.

Homes with higher purchase prices, unique risks, rural farm properties, or commercial spaces can attract higher premiums.

Every property and every deal is different. If you are buying, selling, or refinancing in Alberta, get in touch with our real estate lawyers at DLegal today and ask for the specific coverage that would apply to your property. We offer flat rates for our real estate closing services and help you make informed decisions so your property closing goes smoothly, and your investment is protected for the long term.

The content of this article is intended to provide a general guide to the subject matter and should not be considered legal or other professional advice. To get detailed information regarding your specific circumstances, please discuss your situation with a lawyer or other professional. Refer to our Legal Notice  for more details.