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From the most complex commercial deal to a standard refinance, every real estate transaction carries risk. Your clients rely on your judgement and experience to help them navigate it, and avoid financial losses—it’s what legal professionals do. But a legal opinion can only do so much: it can’t protect owners from unknown issues with their properties, and it can’t protect you or your clients from title fraud. In the event that something goes wrong, it can’t cover a homeowner’s loss.
A title insurance policy is your ultimate risk management tool, but only if you use it. Otherwise, it’s just something that could have helped. The simplest and best way to avoid that scenario is to make title insurance a part of each transaction, and appreciate the benefits:
Obtain coverage for known risks to protect your clients’ closing date
Title insurance can provide coverage over some defects that are known at the time the policy is issued. A known issue during closing can put a transaction on pause, and even small delays can put some deals in jeopardy.
But a title insurance policy can often provide some coverage over known issues, which means that the title provider can assume some of the risk and get the deal back on track. If that issue ends up causing a loss during your client’s ownership of the property, you, your client and the mortgage lender have the peace of mind of knowing coverage is in place.
By making title insurance part of your closing process, you can get coverage for certain known defects, which helps avoid delaying the transaction and putting your clients’ ownership at risk.
Insure against unknown risks to protect your clients’ future
Most of the risks title insurance protects against are unknown at time of purchase, and it’s almost impossible to know which of them apply to a particular property. Title insuring every deal is the most effective way to protect you and your clients, because any deal could be the one that needs it.
Many of the claims FCT handles are made years after the property’s purchase date, when those hidden risks suddenly reveal themselves:
You claim, we cover: a $43,000 loss after eight years of ownership
An Alberta homeowner was starting a home business and applied for a permit from the City. While getting it approved, the City realized that a previous owner had done a large amount of work on the home without a permit—a shed on the property and an addition over the garage needed $42,894 of work to bring it into compliance.
The new owner’s business was about to start off with a massive deficit. But he had a title insurance policy, which his lawyer had ordered for him when he purchased the property eight years prior. FCT was able to cover the full cost of the construction work.
For that homeowner, finding a lawyer who uses title insurance to manage risk as a general legal practice meant getting their business started, instead of dealing with a substantial debt.
Every homeowner faces the risk of title fraud
Title fraud is a devastating financial risk that can impact any homeowner or lender, and title insurance is one of the only ways to recover the financial losses it causes. If a fraudster impersonates your client and commits mortgage fraud or title fraud, it’s on your client to prove that was the case. If they’re able to prove the transaction was fraudulent, the process of getting title restored is long and expensive, often in the tens of thousands of dollars.
Title insurance protects against the lasting financial damage fraud causes by addressing both the expense and difficulty of resolving the issue. Each policy comes with a duty to defend, which means that if an insured homeowner realizes their title has been stolen, FCT steps in on their behalf.
“No one can imagine that they could be a victim of this type of fraud, and they don’t even know where to turn when it happens,” said Daniela DeTommaso, president of FCT. “[But] as a title company, we’re there for our insureds.”
FCT takes on the task of investigating the fraud on the homeowner’s behalf, dealing with all the parties involved in the transaction. “We have to defend the claim,” Daniela said. “That means we’re paying the costs of hiring a lawyer, [and] any associated costs with remedying title.”
With a title insurance policy in place, a defrauded homeowner has an ally ready to step in with the right legal experience and resources to handle the crisis. Without it, that homeowner may not have any options.
Your clients’ risk is your risk
Title insurance provides peace of mind for both you and your clients. You can’t know which of your clients will face a loss from a title issue or fraud, but some of them inevitably will. When they do, your decision to recommend title insurance as part of closing costs will have made the difference between your clients being covered for their loss and them needing to find other ways to recover that loss.
When you title insure every time, the clients who never encounter an issue will enjoy their properties in peace and security, and the ones who need to make a claim will have you to thank for preventing their losses. Manage your clients’ risk, and your own, by making a title insurance policy from FCT a part of your closing process on every deal.
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. Some products/services may vary by province. Prices and products/services offered are subject to change without notice.
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