“TITLE INSURANCE PROTECTING OUR CLIENTS”
The following are true situations where title insurance has assisted our clients, either in allowing a deal to close, or paying out some form of fraud. They come from our files and our clients, with our lawyers and our staff.
Garage issue – Our clients purchased a property which contained a garage shared with the neighbouring property. The rights and responsibilities in relation to the garage were contained in a covenant which should have been, but never was, filed on title. Despite this Langley issued the building permit in error. As a result, our title search and city search was clear when our clients completed the purchase. At some point Langley realized the covenant was not filed and registered a bylaw contravention on their tax records, as they required the party wall covenant to be registered. Our clients sold the property 2 years later. The purchasers’ city search showed the bylaw contravention, and the covenant had to be registered. The covenant required the signatures of the owners of both neighbouring properties, their respective mortgagees and Langley. There was insufficient time to obtain these prior to completion. In order for the sale to proceed, our clients agreed to credit the purchasers $1,000.00, being the legal fees for their lawyers to look after the registration of the covenant. A claim was filed with Stewart Title who covered the $1,000 credit, being the loss suffered from the defect in title (Stewart also covered our additional fees of $300 for the additional work involved). Yes, we should have charged more…..
Fraudulent borrower – this is a lot more substantial. Our client was a lender who agreed to lend a borrower certain money to be secured by a mortgage on title. We prepared the mortgage documents and send them to the lawyer for the borrower, who promptly had them executed and returned to us. We then proceeded to register and fund the mortgage. The lawyer for the borrower received the funds from us and then made his trust cheque payable to a third party, who was a con artist and not the true owner. While there was negligence on the part of the lawyer for the borrower, our lender was paid out by Stewart Title, who then proceeded with the claim against the econ artist, Law Society and whoever else they could pursue. This was several hundred thousand dollars.
Fraudulent Notary/Lawyer – this is a continuous problem, and could still occur. When we act for a buyer we send the money to the vendor’s notary or lawyer on undertakings to clear title. There have been times when the notary or lawyer has not done so. This results in our client having the seller’s mortgage remain on title. Title insurance has assisted many of our clients in this situation.
While the above are from our files, below are from Stewart Title and their files:
Stolen Identity – shortly after the insured lender advanced the funds on a purchase transaction, it discovered that the mortgage had gone into default. The lenders investigation revealed that a fraudster had impersonated the homeowner to sell the home to his friend (another fraudster). Both fraudsters had supplied fraudulent documentation to their lawyer and the lender in order to purchase/sell a home and obtain mortgage funds. Stewart Title paid more than $340,000 to the insured lender, as the insured mortgage was unenforceable against the true homeowner who had been the victim of identity theft.
City Property – the insureds were in the process of selling their property when a prospective purchaser discovered that the rear 20 feet of the land had been expropriated by the City in 1946. Stewart Title retained a lawyer to negotiate with the municipality for the purchase of the expropriated lands. Stewart Title paid more than $42,500, in addition to legal fees to purchase the said piece of property for the homeowners. This rectified the situation and enabled the purchase transaction to close.
Outstanding Permits – shortly after purchasing their home, our insureds learned of two outstanding building permits against their property that were issued 15 years prior to their purchase. The permits were relating to two large additions on the home. Stewart Title paid approximately $146,500 to remedy the situation such that the building permits could be closed, which included repairing several major structural flaws relation to the foundation and support beam deficiencies.
We hope this is of help to those concerned about title fraud and title insurance. For further information or answers to any questions on Title Insurance, please email us at email@example.com
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