New Extended Super Priority Lien Coverage
Introducing the Extended Super Priority Lien Coverage
Dear valued customer,
FCT’s number one priority is to help you provide the best advice to your client, including the importance of mitigating lender risk. That’s why, effective immediately, FCT has extended the existing title insurance coverage to include super priority lien claims made within 10 years following the discharge of the mortgage, up to a maximum of $500,0001.
This coverage is extremely important for lenders because the government has a number of years to make a super priority lien claim, which could result in the lender being responsible long after the property is sold and the mortgage is discharged.
Protect your lender clients with the facts.
One of the most valuable coverages in a lender’s title insurance policy is the coverage for deemed trust claims made by governmental authorities. Under various legislation2, such as the Excise Tax Act and the Income Tax Act, the Canada Revenue Agency (CRA) has the authority to claim a super priority lien over all of the tax debtor’s assets if the debtor has not remitted the amounts owing.
For secured loans, this means that the lien amount of the deemed trust in existence when the mortgage was registered takes priority over the mortgage. This causes concern to lenders because super priority liens are not typically registered on title, and the lender has no way to validate that the tax debtor (their borrower) is currently up-to-date on government remittances prior to funding the mortgage.
Protect your lender clients today.
Ordering FCT’s Extended Super Priority Lien Coverage for your lender clients is easy:
Residential transactions – no action is required! For institutional lenders, the coverage is automatically added to the Certificate of Insurance at no additional cost.
Commercial transactions – for institutional and private lenders, the coverage is available as an endorsement for an additional $175.003. To add this endorsement to a commercial loan policy, simply answer “yes” to the Extended Super Priority Lien Coverage question when ordering.
For more information, please contact our Residential or Commercial Solutions underwriting experts Monday to Friday from 8:00 am to 8:00 pm ET.
September 3, 2020
1 The maximum amount of coverage is the lesser of the Insured Amount defined in the policy or $500,000.
2 Legislation relating to deemed trusts is not limited to the Acts or governmental authorities referenced. Additional federal and provincial legislation may apply.
3 The extended Super Priority Lien coverage is not available for vendor take-back (“VTB”) mortgages, residential policies insuring private lenders or commercial policies insuring private lenders where the lender is not in first or second priority. Any knowledge of existing liens or unpaid remittances must be disclosed for underwriting purposes.
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