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Real estate is a risky area of law. Conveyancing even a simple deal has so many parts that even with strict attention and due diligence, details can fall through the cracks. But it only takes one missing detail or incorrectly worded document on a real estate transaction to cause a significant financial loss.
That’s why staying protected is so important—it’s impossible to know today which of your open files will cause an issue later. Consider these real scenarios that legal professionals have encountered:
When purchasing a new-build home, a couple sought their lawyer’s advice prior to finalizing the agreement. In their review, the lawyer representing the couple advised them the development charges for that property would be capped at $1,500 plus tax, so the couple proceeded to waive the conditions and proceed with the deal. It turned out that advice was incorrect—the development charges weren’t capped at all. The couple closed the deal and ended up having to pay thousands more than their lawyer had disclosed to them that they would.
Cost: $7,797.00
A buyer moved into her condo with plans to renovate it. When she started taking out the walls, she saw fibers, which turned out to be asbestos. The status certificate the buyer obtained disclosed this issue, and the requirement of the condominium corporation that any buyer conducting renovations complete necessary remediation. The lawyer had missed discussing and advising their client on this concern in the status certificate, and now that it had been disturbed, it all had to be removed.
Cost: $29,380.00
Small mistakes shouldn’t cause large losses
What do these stories have in common? In both cases, the clients were completely covered, thanks to a $25 payment for the Deal Protection Endorsement from FCT.
The Deal Protection Endorsement is an extra layer of protection that you can add to atitle insurance policy with FCT. The claims limit for a residential transaction is equal to the value of the property, so it can cover you even for large claims, like in the asbestos example. On commercial transactions, the claims limit is capped at $5 million.
The Deal Protection Endorsement from FCT protects against losses due to:
- errors or omissions in the review of the agreement and documents related to the purchase or financing of the land,
- errors or omissions made in the statement of adjustments,
- failure to conduct title or off-title searches prior to the date of policy,
- failure to obtain additional documents,
- incorrect advice on how to take a title.
The endorsement applies to the policy coverage itself, not to your mandatory errors and omissions insurance, or any other E&O protection you have from FCT. If you’re a legal professional practicing in B.C., the endorsement covers you directly.
What about smaller E&O claims?
When an error or omission results in a small loss, making a claim can feel like it isn’t worth the deductible and increase in your premiums. But take a look at these real scenarios:
The lawyer representing the buyer of a small commercial property had inadvertently forgotten to send the change of ownership notice and buyer’s mailing address to the City when the transaction closed. Because of that, the buyer didn’t get the tax bill until they had racked up over $1,000 in fees. The lawyer found out about the issue in an angry email from the buyer 15 months after the closing date.
Cost: $1,639.41
A lawyer processed a refinance transaction, acting for the lender as well as the borrowers. The property already had a mortgage with another lender, which had to be paid out and discharged as part of the transaction. But the lawyer’s office inadvertently didn’t pay out the existing mortgage until after it had matured. The borrowers ended up with thousands in prepayment and interest charges, and held their lawyer responsible.
Cost: $6,197.80
As part of closing the sale of his client’s house, the lawyer handling the transaction didn’t pay the house’s property taxes for the previous year out of the sale proceeds. When he had to pay those taxes out of his own account, he went to his clients for reimbursement, but they didn’t see it his way. They had received the sale proceeds and as far as they were concerned, that was their money.
Cost: $4,313.43
E&O Complete™ is there when you need it
In all three of these scenarios, a tiny mistake meant that the legal professional handling the transaction needed to deal with a small but urgent settlement. E&O Complete™ from FCT is perfect coverage for situations like these because it provides fast, direct and hassle-free coverage for up to three smaller claims (under $10,000) per year. When you sign up for the year, you can enjoy peace of mind knowing that even if an issue comes up, FCT has your back, no matter the timeframe.
Get more protection in 2025
Starting January 2025, FCT’s E&O Complete™ coverage will increase from a maximum of three claims or $10,000 per policy year to a maximum of four claims or $20,000 per policy year.
Practicing real estate law carries risk on every transaction, but you have the tools and protection available to manage that risk. Sign up for FCT’s suite of E&O insurance offerings today, and close every deal with confidence.
Insurance by FCT Insurance Company Ltd. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Insurance brokerage services by FCT Insurance Services Inc. Some products/services may vary by province. Prices and products/services offered are subject to change without notice.
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