Why is real estate practice the riskiest area of law?

Jun 2nd, 2022 | By FCT

Real estate is once again the riskiest area of law to practice for the third year in a row, according to errors and omissions claims statistics. To look only at the last few years, it seems like real estate recently overtook litigation in terms of risk, but a longer view of the data tells a different story.

Real estate and litigation have formed the bulk of claims every year since LawPRO, the mandatory errors & omissions insurance provider in Ontario, started releasing annual reports in 1995. In over half of those years, claims from real estate practices were higher than litigation claims in number or cost, making up 34% of the total in 2021.

Litigation being a risky area of law makes intuitive sense, since it’s so adversarial. But from the claims data, real estate law seems even riskier. Why?

Real estate is a complex environment

Even the simplest real estate deals have multiple agents and moving parts, and many deals have complications or unique details to account for.

There is only a miniscule chance of an error or omission on the part of a vigilant legal professional working on any one component of a deal. But high volumes and complex transactions mean that there are more opportunities for the tiny chance of something going wrong.

Real estate errors and omissions are more expensive

Real estate transactions deal with hundreds of thousands, sometimes millions of dollars in value. Even a mistake that causes a small percentage error can result in a significant real loss. This has always been an element of risk in real estate practice, but it’s gotten worse over the last decade.

Property prices have risen starkly since 2012, and their growth has only accelerated in the past few years. Even as housing prices start to cool, the stakes of practicing real estate law are higher than they used to be.

What can you do to protect yourself?

Mandatory errors and omissions insurance is a great base level of protection, but can come with high costs, especially for real estate practices. Having to make a claim could result in your premium going up, and depending on the deductible, you may only get partially reimbursed for your loss.

That’s why at FCT, we offer legal services coverage for more protection on real estate deals. Our suite of errors and omissions products complements your mandatory E&O and includes E&O Extra®, E&O CompleteTM, and the Deal Protection Endorsement.

The E&O Extra® policy is applied to every purchase or refinance transaction we title insure at no extra cost, covering your mandatory E&O insurance’s premium increases and deductible in the event of a claim. All you need to do is register for the coverage.

For a low annual premium, you can also get E&O CompleteTM, which provides up to $10,000  in direct, hassle-free coverage—no need to wait for reimbursement. It’s perfect for dealing with small claims before they become big problems.

Adding the Deal Protection Endorsement to every residential purchase and refinance transaction insures your client directly for errors or omissions on your part that don’t fall under the protection of their title insurance policy (In B.C., it insures the lawyer or notary themselves).

Learn which of FCT’s E&O products are right for you and your practice.




Insurance by FCT Insurance Company Ltd ,with the exception of commercial policies, which are provided jointly by FCT Insurance Company Ltd. and First American Title Insurance Company. 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.

®Registered Trademark of First American Financial Corporation.



Categories: Legal Professionals

Leave a Reply

Your email address will not be published.