Today's topic is one which appears to be more and more in the public eye. Some title insurance companies are opening "closing centres" and making deals with builders and banks. What is it really all about?
Title insurance is supposed to provide comprehensive insurance coverage for the certain of the title-related risks associated with home buying. Risks such as zoning issues, claims of mental incapacity, lack of an up-to-date survey and the legal services provided by your lawyer (i.e. title certification). It insures against such defects in title, which may occur from conflicting ownership claims, liens, undischarged mortgages, consents and the like. It will cover compliance and access issues i.e. work orders, permit violations, fences, boundaries, tenancies, rights of way, certain easements etc. It is supposed to be in force for as long as the purchaser or his/her heirs own the property. Title insurance will, purportedly, outlive the certification of your lawyer, whose insurance stops if he or she dies or stops practice.
OK, first of all title insurance provides an insurable title not necessarily a marketable one. What does this mean? It means that if something is wrong and a prospective purchaser will not accept a new title insurance policy at no cost, and provided the insurer does not go broke (this has happened in recent memory), the insurer will pay out in accordance with the policy or will, if possible, repair the defect. In the great scope of life I guess eventually it won't matter what the title says if people are content to rely on insurance coverage. I sure wouldn't be happy, but then again most people are very cost conscious and why pay for all the expensive parts of a full search if you can just buy a policy. Most, if not all, of the title insurance companies currently operating in the GTA are the same U.S. title insurers that dominate the market south of the border and have seen the possibilities and moved to Canada.
Don't get me wrong I believe title insurance in its place can be a valuable and effective tool. What I object to is the pervasive and deliberate attempt by some of the companies to try and control the market through their closing centre concept. My firm has signed up to TitlePlus, which is the insurance program offered by the Law Society of Upper Canada through its insurance arm. I personally believe this is the fairest and maybe one of the best of the bunch. They let the lawyer take care of the client.
One of the big advantages to title insurance relates to older homes registered under the registry system, where a 40-year search to a good root of title and adjoining property search is still required (certain searches such as corporate status, escheat and in some instances zoning and executions can be eliminated with title insurance) and for certain new-home deals. In addition TitlePlus has made arrangements with certain builders to insure whole subdivisions. TitlePlus then took on as many of the certified user lawyers as wished to participate and set a low priced, title insurance deal with an all-in disbursement figure. All of the lawyers had to take a bunch of courses and go through a long, long, long seminar before we were able to get the software to be part of this.
So what is the verdict? This is my opinion only!!! Title insurance has its place, but I personally would only take the TitlePlus insurance offered through the Law Society of Upper Canada. Their loyalty and mandate is to protect the public and to govern lawyers. As a consumer, these two facts would certainly make me feel better. I keep telling you, only lawyers can legally give legal advice and for my deal I don't want any closing centre; I want a lawyer doing the work. Make sure you ask your lawyer whether he is sending your deal to a closing centre and if he is, who is doing the work, the closing centre or the lawyer? Make sure you require that if your deal is going to a closing centre your lawyer puts in writing exactly what work he or his office is personally performing and exactly what work the closing centre is doing. Don't allow the lawyer to charge for work he didn't do and don't accept some exorbitant amount for supervision!
In conclusion every lawyer has an obligation to make you aware of your title insurance options so you can choose which way you want to go. Think through your options carefully and choose wisely.
For more informative articles, click on Legally Speaking on the left. Jayson Schwarz is a senior partner with the firm Schwarz Gillen Barristers and Solicitors. He can be reached at (416) 486-2040.
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