Title insurance & Murphy’s law (things that can go wrong, do go wrong)
Oct 23rd, 2013 | By Lori Sartor
In an earlier post, we discussed the title insurance landscape in Canada and the coverage for the residential homeowner. If you are like most people, you may believe that the actual situations in which you would need title insurance appear remote or difficult to imagine. Well, the problems that can arise really aren’t all that strange and they are more common than you might think. The trick is not to make them your problems.
The cases described below are real – they actually happened to unsuspecting homeowners, just like you. Imagine your dismay and concern when…
You receive a letter from your municipality advising that your deck, deck addition, deck roof and basement renovations were constructed by the previous owner, unbeknownst to you, without building permits. Further, you are informed that a permit must be obtained for the basement renovations and your deck must be removed. The situation alone is a nightmare, let alone the cost to comply – $54,055.50. Fortunately, you have title insurance and your costs are covered. Problem solved!
You have just moved into your first home. It was a financial stretch and you are trying to adhere to a tight budget. Surprise! You receive a note from the city regarding outstanding tax and water and utility charges from the previous owner – $2,034.79. What do you do? You have title insurance – and to your delight, you find that you are covered for tax and utility arrears. You don’t write the cheque; FCT does. Problem solved!
You are moving and have sold your existing property. As closing approaches, you receive a notice for outstanding work orders dating back before you purchased your home. This revelation is rather serious because it may impact the closing of your home sale and the cost to cure is $11,315.00. Again, you consult FCT regarding potential coverage and they or we? write the cheque to clear the work orders and your closing proceeds as planned. Problem solved!
You become aware that your mortgage is in arrears and a lender sends you notice regarding possibly taking possession of your property. But you know your payments are current and, in fact, you don’t even have a mortgage with the lender in question. In a panic, you call your lawyer. Investigation reveals that your title has been fraudulently transferred to someone else who has taken out a mortgage, disappeared with the funds and left you to deal with a potentially serious problem. Your lawyer reminds you that this cloud has a silver lining – you have title insurance. FCT pays out $12,548.09 in legal fees to have the fraudulent mortgage removed and the property title transferred back to you. Problem solved!
When you put yourself in the shoes of these homeowners, it is easy to imagine the stress of running into one of these situations. They are difficult to deal with and the costs can be significant, even financially devastating. Protecting your most significant asset, your home, is critical and why growing numbers of lawyers recommend and place title insurance on behalf of their clients.
Are there property risks you are wondering about? We’d love to hear from you.