Russian Edmonton Real Estate

This is the  article written by author Stan  Galbraith of Galbraith Law.

Within the last 10 years, a new insurance product has arrived in  Alberta.  It is commonly referred to as title insurance.

What is title insurance? This product was never available before so what has  changed?  What does title insurance provide that cannot more adequately be  provided by a Real Property Report (RPR)?

Title insurance has been a popular product throughout the United States for  many years.  In fact, Chicago Title traces its history back before the  famous Chicago fire caused by the cow.  The three major title insurance  companies providing insurance in Alberta all have a parent company in the  USA.  These companies first started Canadian operations in Ontario.

Both the USA and eastern Canada operate a different Land Titles registration  and transfer system then we have here in Alberta.  We are fortunate in  Alberta to have a government-guaranteed Land Titles system commonly referred to  as the TORRENS system.  Throughout the rest of North America, when you get  a Title, you can never be completely sure that it discloses everything.   For example, there could be an unregistered mortgage or unregistered transfer  that may impair your title.  In Alberta, “what you see is what you get” and  the government guarantees this.

Previously, title insurance primarily covered the issues covered by the  Torrens system.  Eventually, companies became innovative and expanded their  coverage, so their insurance had applicability here in Alberta.  Over the  years they have continually added new items to their coverage.  Now, their  product offers substantial benefits at a very reasonable one-time cost. Some  of the issues title insurance covers is as follows.

It covers the gap between submission and registration.  A couple of  years ago when registration was taking 5 weeks or more, you could never be sure  when you submitted your documents as to other registrations in the stream that  may affect your title.  For example, I acted for one purchaser where the  sellers ex-spouse filed a Matrimonial Property Judgment against the title one  week before we submitted our Transfer of Land.  When we submitted, the  Judgment was not there.  By the time we got registration, the Judgment was  registered.  Title insurance will step in to deal with this.

It will cover deficiencies that would not show on a Real Property Report such  as unregistered utility easements or builders liens or matters that would be  shown by non-Land Titles searches such as deficient corporate status.  It  will cover hidden deficiencies such as underground storage tanks or underground  septic tanks.  In one case, they paid out a claim to move a septic tank  when it turned out the tank was buried partly under the neighbors land.   Coverage is also provided for unknown special assessments on condominiums.

Title insurance covers issues that would have been shown on a Real Property  Report if one had been obtained.  Use of this product can avoid the need to  obtain a Real Property Report.  It also covers internal non-compliance  issues that would never be shown on a Real Property Report such as lack of  building permits or failure to meet building code on renovations such as a  basement development.

Even where there are known defects, title insurance will often underwrite  these issues.  This could include a fence in the wrong location or a deck  that is too big for the property.

Most of this coverage continues after the closing date.  Perhaps the  most important coverage that continues after the closing date and during the  entire time the property is owned is against forgery, fraud, duress,  incompetency, incapacity, or impersonation.

Title insurance is an insurance product.  As such, it does not fix a  problem.  It provides insurance or indemnity coverage.  In other  words, the title insurer has no obligation to do anything until a problem  actually arises.  When this happens, they have the choice to pay damages  rather than actually fix the problem.  Problems can be deferred or masked  instead of fixed.

Deferring or masking problems can come back to haunt all parties at a later  date.  For example, when a seller, who accepted title insurance when they  bought, sells and the buyer does not accept title insurance they may be forced  to solve the problem.  Obtaining Encroachment Agreements, especially where  fences or other structures encroach onto municipal land can be quite  costly.  Likewise, applying for and obtaining development and building  permits can be time consuming and expensive.  If a buyer insists on this  solution, the seller may be forced to undertake an expensive remedy and may look  to the realtor and lawyer who helped them originally purchase the property for  some redress.  Accordingly, it is doubly important to ensure a purchaser  understands the extent and impact of title insurance coverage and the fact that  it does not apply when they sell the property.  By simply insisting that  any new buyer obtain title insurance rather than relying on an RPR, they will  continue to defer any issues.

Overall, in my view, title insurance is a valuable addition to the real  estate marketplace in Alberta.  The coverage for future fraud for the  entire ownership of the property by payment of a one-time premium is enough  justification to purchase title insurance on every real estate purchase.   In some cases, title insurance is the only way to effectively close a real  estate deal.

About the author: Stan Galbraith is a lawyer with over 25  years of experience.  He was admitted to the Alberta Bar in 1983 and has  operated his own law office since 1988. Stan has a wealth of experience ranging  from litigation and appeal work, to teaching and writing. He has now left the  world of litigation behind and works with commercial and residential Realtors  and their clients on closing their transactions. He also practices  extensively in the areas of small business and wills and estate planning and  administration. You can find his website at www.galbraith.ab.ca.