The case of the missing $20,000
What would you do if a typo left you $20,000 short?
According to a recent article in the New Westminster Record, an ongoing lawsuit is based on this question. The article describes a situation where a notary acted for a couple on the sale of their condominium, and because of an alleged typographical error, he disbursed $20,000 more in sale proceeds than he actually received. The lawsuit alleges that the notary’s attempt to recover this money from his clients has been unsuccessful, so he has no choice but to cover the funds from his own pocket.
Reading this article brought to mind several of the claims recently addressed under FCT’s E&O Complete policy. Our policy is an innovative way for lawyers and notaries to protect themselves from liability for errors or omissions when providing legal services on a “Qualifying Real Estate Transaction,” in addition to their mandated professional malpractice insurance. In general, a Qualifying Real Estate Transaction is one where the lawyer or notary acted for a named insured on an FCT title insured deal. In the context of a sale transaction or a refinance where the lawyer or notary only acts for the borrower, a Qualifying Real Estate Transaction is any transaction regardless of whether FCT issued a policy.
The E&O Complete policy applies to both commercial and residential deals and provides two levels of protection. The first is for claims greater than $10,000, where the policy will cover any deductible or claims history surcharge levied by the mandated primary errors or omissions insurer. The second level of protection is for claims under $10,000 where the policy covers the liability of the insured arising from an error or omission in providing legal services. The coverage for these smaller claims is limited to $10,000 for all transactions closing during the policy period or three claims, whichever comes first.
While a title insurance policy covers a host of issues, the E&O Complete Policy is there for ones that fall outside the scope of the coverage of a title insurance policy, but still involve an error or omission when providing legal services.
Since FCT started offering this coverage, we have seen a variety of claims involving innocent errors on paying out mortgages or disbursing sale proceeds where the lawyer or notary was able to recover their out of pocket losses through their policy.
As the notary’s case winds it way though the courts, now might be a good time to consider how this enhanced protection could benefit you.