Buying a Power of Sale in Ontario?Title Insurance and HST Are Non-Negotiable

No Warranty of Title from the Seller

In a standard resale, the seller’s APS includes a Warranty of Title — a contractual promise that the title is clean. In Power of Sale transactions, the lender explicitly states it makes no such warranty. Any title problem discovered after closing is entirely the buyer’s problem. Title insurance bridges this gap.

Hidden Risks Specific to Power of Sale Properties

• Construction Liens: If the previous owner owed money to contractors, those liens may still attach to the property
• Unpaid Property Taxes: Municipal tax arrears have priority over the mortgage and transfer with the property
• Secondary Mortgages: The first-lender’s sale may not extinguish all registered encumbrances
• Zoning or Permit Violations: Unpermitted additions or renovations can trigger municipal orders against the new owner
• Environmental Issues: Underground storage tanks or contamination not visible in title records

What Title Insurance Actually Covers

A standard owner’s title insurance policy protects against:

✓ Unknown liens and encumbrances
✓ Title fraud (someone impersonating the owner)
✓ Errors or gaps in title registration
✓ Zoning or building code violations
✓ Survey or boundary disputes

Premium is a one-time payment — typically 0.1%–0.4% of purchase price — and coverage is permanent for as long as you own the property.

When HST Generally Does NOT Apply

If the Power of Sale property is a used residential dwelling previously occupied by individuals as their primary residence, the sale is typically HST-exempt. This is the most common scenario, but still requires written confirmation from your lawyer.

When HST May Apply

• Seller is an HST-registered corporation (e.g., developer’s lender selling a new unit)
• Property previously used commercially — including short-term rental (Airbnb) use beyond a threshold
• Never-occupied new construction in Power of Sale — HST applies to new builds

Ontario’s 2026 HST Rebate — Does It Help POS Buyers?

Ontario’s April 2026 policy removes the provincial portion of HST (8%) for first-time buyers of new homes under $1M, effective until March 31, 2027. Power of Sale properties are almost always used residences — not newly constructed — so this rebate typically does not apply to POS buyers.

Do I need title insurance for a Power of Sale property?

Yes — it’s more essential here than in any other transaction type. Without a warranty of title from the seller, title insurance is your only protection against hidden liens, fraud, and violations discovered after closing.

Is HST payable on a Power of Sale purchase?

It depends on the property. Used residential homes are typically HST-exempt. But if the seller is an HST registrant or the property had commercial use, HST may apply. Confirm with your lawyer before signing the APS.

How much does title insurance cost?

Typically 0.1%–0.4% of the purchase price, paid once at closing. On an $800K property, that’s roughly $800–$3,200. It covers you permanently for as long as you own the property.