Today’s topic is one, which appears to be more and more in the public eye. 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 up to date survey and the legal services provided by your lawyer (ie. 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 ie. work orders, permit violations, fences, boundaries, tenancies, rights of way certain easements etc. It is supposed to be in force so long as the purchaser or his 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 US 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 am a registered lawyer with a program offered called Good Start which is jointly offered by certain builders and Title Plus. What this program does is provide an opportunity for lawyers to use title insurance and reduce the cost to the consumer purchaser of disbursements significantly. As you all know I keep providing disbursement lists to all of you in my articles. There are currently many sites subscribing to this program and rather than the $500 - $600 currently being spent on disbursements one of these deals should be able to be done for disbursements under $400. The fees charged by lawyers will vary but frankly I see no reason they should exceed the amounts advertised in this magazine. What I suggest you do is check with your builder before you sign to find out if they have signed up for the program and if he has then find a lawyer who is part of the program. Remember one thing, the difference between Title Plus and the other title insurance companies is that only Title Plus requires that only a lawyer can handle your deal. What you want to avoid are the “closing centres” you see advertised. Some lawyers let the closing centre do all the work and just add on a fee pretending they did something. 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 accept some exorbitant amount for supervision!

A big advantage 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).

Just so everyone understands, in less than 5 years all of Ontario will be on an electronic registry system. Title insurance will be the norm and most of the transaction will be done by computer to computer communication. Make sure the lawyer you select has taken the title insurance courses, has gone to the seminars on Terranet, the electronic registry system and can properly advise you. Closing centres can’t do this. The Law Society passed a rule that every lawyer on a residential real estate deal must advise the client of title insurance, the different companies and how it works. Remember a lawyer survives by repeat business and referrals and a lawyer’s mandate from the Law Society is that the client’s best interests must come first.

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.