By: Jayson Schwarz

In order to explain title insurance the best way may be to tell a story.

Once upon a time Shaun and Molly purchased a beautiful condominium in downtown Toronto. They hired a lawyer, who we will call Grumpy and he closed the deal without a problem although Grumpy seemed, very, very, very, happy all of the time. About three years later the couple decided to sell their beautiful condo because they were expecting a baby and wanted to buy a house. They listed their condominium and sold it. They searched high and they searched low but they could not find Grumpy. As a result Shaun and Molly located a new lawyer and his name was Dudley Do-right. Dudley agreed to close their deal. About a week after being retained, Dudley called Molly and asked why she had not told him about the $50,000 mortgage on title as he had received a letter from the Purchaser’s lawyer asking him to have it removed. Molly confessed that neither she nor Shaun knew anything of this mortgage.  Dudley then exclaimed “Let me see your reporting letter from that Grumpy fellow!” After reviewing the letter Dudley crowed “You are right! This says there should be nothing on the title. Someone has made a MISTAKE!”

At this point Shaun and Molly were rightfully quite concerned and asked Dudley what they could do. Dudley explained that all practising lawyers in Ontario are insured through Law Pro, an insurer owned by the Law Society of Upper Canada. Dudley was instructed to proceed. Law Pro advised Dudley that there should be no problem and that they would get back to him shortly. A week later Law Pro contacted Dudley and told him a sad story. Apparently Grumpy was so happy because he had become addicted to Christmas pudding and spent all of his time baking and eating Christmas pudding all year round. It seems that as a result he neglected his client’s and practice and had made the MISTAKE. Now normally Law Pro would just pay for the mistake, but now the tragedy really set in: while walking down Yonge St., an elephant had fallen out of a passing 747 airplane and hit Grumpy squashing him flat and dead. What this meant to Shaun and Molly was that Grumpy’s Law Pro insurance would not cover the MISTAKE, because lawyer’s insurance only works while they are in practice (not dead or retired) and as Grumpy died penniless, Molly and Shaun would have to bear the cost of the MISTAKE.

Was there a better way? Yes there is!  Every person buying a home in Ontario should insist on their lawyer obtaining title insurance coverage. Title insurance does 4 things better than a lawyer’s insurance does:

1. It covers more things than a lawyer’s insurance;
2. It lasts as you or your heirs own the property;
3. It saves you around $300 in disbursements; and
4. it protects against mortgage and title fraud;

Comprehensively title insurance provides comprehensive insurance coverage for the title-related risks associated with home buying. Risks such as zoning issues, claims of mental incapacity, lack of up to date survey and the legal services provided by your lawyer (i.e. title certification, negligence, etc.). It insures against such defects in title, which may occur from conflicting ownership claims, liens, un-discharged mortgages, consents and the like. It will cover compliance and access issues i.e. work orders, permit violations, fences, boundaries, tenancies, rights of way, certain easements etc.

Good luck and happy home hunting!!!!!!!!!!