Jul 14 | 2017

Why Jack Smith* was glad he had E&O Extra® with Protection+

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E&O InsuranceWhen Jack’s clients were slapped with a $47,000 development charge, they were astounded. Jack made an honest mistake in failing to advise them about this charge and that there was no cap on it.

To maintain their reputation and keep their clients happy, the law firm was able to negotiate with the builder to reduce it to $10,000. Looking at a reasonable industry standard, the purchaser of a new home could expect to pay $7,500 in development charges so the firm covered $2,500 from their own pocket and the clients paid the remaining amount.

Luckily for Jack, he was protected by his E&O Extra** with Protection+ insurance. He submitted a claim to FCT and was reimbursed for the $2,500 paid to smooth things over with the client.

If you were in a similar situation, would you have been protected?

FCT understands that mistakes happen. We offer insurance products to complement your mandatory E&O insurance. We provide reimbursement for losses resulting from claims against your mandatory E&O insurance for residential and commercial real estate transactions. This includes your standard deductible payment and any increase in premium***.

For additional coverage, like Jack’s, you can add Protection+ to your E&O Extra policy for a minimal fee.  It offers you the ability to settle smaller claims directly with your client and avoid going through your mandatory E&O coverage. It covers up to $10,000 per policy year or a maximum of three claims (whichever comes first).

Contact us to learn the different ways we can protect you and your reputation.

 

*The name has been changed to protect the privacy of our clients.
** E&O Extra does not cover dishonest, fraudulent or criminal acts of omissions.
*** Standard deductibles, premiums and coverage amounts vary by region.
Insurance by FCT Insurance Company Ltd. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy.
Jun 28 | 2017

Strata Plan VS Title Insurance: Which One Do You Really Need?

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Strata plan vs title insuranceDarren* applied to change the use of his commercial condo unit to a medical one, but his request was denied. He was told by the municipality that the site plan agreement had not been complied with as the condo corporation required another 97 parking spaces to be added. The municipality then issued a Notice of Violation of the Site Plan Agreement due to the lack of parking spaces. The condo corporation has to decide whether it will add the parking to comply or try to change this requirement in the site plan agreement. This may mean an increase in common expenses or a special assessment to be paid by Darren and the other unit owners. Because Darren had a commercial title insurance policy from FCT, we are paying for the legal costs to defend him in dealing with the Notice of Violation.

In Darren’s case, the Site Plan Agreement would have needed to be compared with the Strata Plan to make sure they matched. However, having a strata plan would have provided no protection as it would not have covered his legal expenses or potential loss of value to his property if he can’t use it as he planned to.

A strata or condominium plan, like a survey, is created by a surveyor and it documents unit sizes and structures as well as what is common and exclusive use property. It also includes any parking or lockers that are part of the unit. However, if there’s an error in the strata plan or the structure does not match the plans – it’s the owner who may be responsible for part or all of the costs associated with remedying the issue.

A legal professional can provide an opinion on title based on the accuracy of information provided to them and an up-to-date or existing strata plan or survey. However, without a title insurance policy, a strata plan by itself offers no protection for the property owner or legal professional in case of incorrect information or discrepancies.

With an FCT title insurance policy, we protect both the legal professional and owner by providing loss of value coverage, duty to defend, funds to fix most municipal enforcements, fraud protection and more. It benefits lawyers by shifting the risk and liability associated with the title and strata/condo plan to us. Our condo endorsement also covers lack of disclosure in a Status Certificate, if the condo corporation has not been properly created and it results in a title defect. A Status Certificate is not always necessary for a loan policy depending on the insured amount.

While both a strata plan and title insurance are important in a condo or bare land purchase, choosing the one that offers you more protection is a safe bet!

*Name has been changed to protect the privacy of the individual.

May 31 | 2017

Does Your Client Really Need Title Insurance?

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Does your client need title insuranceThe topic of title insurance may come up when clients are purchasing a new property, and a common question is, “do I really need it?”

Well, title insurance in Canada has come a long way from when we first introduced it to the market over 25 years ago. It offers the best defense against title fraud, as well as survey and title issues/defects. It can also protect your clients from unexpected costs that may threaten their financial status.

For instance, Jason and June* finally found their dream home after years of saving and searching for the right property. Once financing was approved, they happily moved into their newly purchased home. Shortly after moving in, they received a notice from the city about outstanding tax and water utility charges amounting to over two thousand dollars. This was a very unwelcome surprise given their tight budget as first-time homebuyers. Luckily their lawyer had recommended they purchase a title insurance policy, which covered outstanding tax and utility bills. Because of their title insurance coverage, they were spared the extra expense when the claim was paid out by FCT.

Commercial property owners also benefit from protecting their multi-million dollar investments with title insurance as it covers issues like encroachments, zoning violations, unpaid taxes and utilities, etc. For example, a developer Jack*, purchased a golf course with plans to develop it into a larger golf course and resort. The municipality provided confirmation that the land could be developed for these purposes. Unfortunately, after closing, he was notified by the municipality that there was an error and the land was zoned as “open space/residential” and applying for re-zoning was not an option. As a result, the land could continue to be used as is but development plans could not proceed. Because FCT had insured the value of the land along with the approximate value with the improvements, Jack received a claim settlement for the loss in property value because of the zoning error. With the claim settled, he had the choice to use the property in keeping with current zoning, or sell the property without incurring a financial loss.

So does your client really need title insurance? You decide.

*Names have been changed to protect the privacy of our clients. This information is provided as general information only. For further details please review the subject policy.

Jul 19 | 2016

We have your back

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IntegrityIntegrity. It’s a loaded word. It’s also one of FCT’s core values that we don’t take lightly. To me, doing business with integrity demonstrates to customers that we say what we mean and we mean what we say.  It says that we stand behind our coverage and are there with the support customers need when they have a claim. It’s about having the reserves in place and the overall financial stability to be able to pay our claims.

In fact, our claims-paying ability is what sets us apart from many of our competitors. Customers rely on the coverage they purchase and we rely on our in-house underwriting experts to always try and find a way to say “yes” to coverage. Otherwise, it’s just lip service and frankly, that’s just not what we’re about.

Our goal at FCT is to protect our diverse customers to the best of our ability. We see a lot of cases where a lender policy has been ordered on a transaction but a homeowner policy is not ordered at the same time. When a title issue arises some time later, a homeowner will call to inquire about their coverage only to learn that they don’t have protection as there is only a lender policy. In most of these situations the homeowners would have received coverage but were not afforded this opportunity due to the simple fact that a homeowner policy was not requested at the time of order.

To prove how committed we are to “having your back,” we’ve added a new member to our existing underwriting team that already boasts some of the most experienced professionals in the industry.

Not only does this individual bring solid experience as legal counsel with insurance litigation firms, a membership in the Barreau du Québec and the Law Society of Upper Canada, but also a perspective that coincides with the FCT ideology — he believes in helping people. Funny story: when he joined our team, he was impressed by our approach to paying claims; describing the difference of finding a way that he could say “yes” to the claim.

I realize I may be slightly biased, but I think we’re the best in the business for a reason: we care and we’re ready, willing and able to help when you need us to. It’s that simple.

Do you have a story to share where FCT came through for you when others said “no”? I’d love to hear it. Please feel free to comment below.

Apr 14 | 2016

FCT is your trusted partner in the fight against real estate fraud

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fraud alertReal estate fraud continues to be on the rise and unfortunately, commercial transactions are no exception. But with FCT in your corner, we can work together to stop fraud before it has a chance to create havoc and claim victims.

The experienced team at FCT employs various due diligence techniques to:

  • Spot suspicious activity (what we like to call “red flags”);
  • Report potential issues to all involved parties; and most importantly
  • Prevent fraudsters from scamming our partners out of their rightful investment.

In fact, it’s something our underwriting team does (and does very well!) on a daily basis, even during the height of the holiday rush . . . .

The naughty list

At the height of the holiday rush, FCT’s commercial division received a request for title insurance for a blanket mortgage in the amount of $2.6 million, spanning five vacant properties, all with titles free and clear (first red flag!). The transaction involved a private lender and a corporate owner.

As part of the request, FCT was provided a copy of the Corporate Profile and the Corporate Document List – everything looked okay.  However, after supporting identification for the borrower was received upon our request, our eagle-eyed underwriting team determined that one of the pieces of identification being used was invalid.

Feeling a bit uneasy about moving ahead with the file, FCT underwriting contacted the lender and the mortgage broker for more information. Years of experience and pure instinct told us that something was off. Our team then called the lawyer involved with a previous purchase of one of the lots — we were right! When compared, the two pieces of ID did not match and showed conflicting information.

For our underwriting team this was more than enough evidence to suspect fraud, especially with such a large deal. We declined to insure the deal and the lender pulled out as well. The real owner was contacted and their lawyer ultimately confirmed that the deal was a fraud.

What did we learn?

  • Bad things can happen to good people – secure your client’s investment with title insurance
  • Put FCT to work for your practice – it is always beneficial to have a second pair of highly skilled eyes on your file
  • Have confidence in our process – we’ve stopped $198 million in possible fraudulent transactions over the past 4 years and we know how to help protect you

Do you have any fraud stories you’d like to tell us about? Until next time, keep your eyes peeled and as Michael LeBlanc told us in his recent blog, trust your instincts.

Jan 21 | 2016

Tapped out: the story of an $87,000 water bill

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water meter small

How going with the flow wasn’t an option for one Winnipegger

We’ve all experienced the shock of receiving a bill that is way higher than expected.  Each and every month I dread getting my cell phone bill because I have three teenage daughters who love using Instagram. However, the shock I get from my monthly cell phone bill is really nothing compared to what Winnipeg native Tom Kisiloski received when he opened an $87,000 water bill! Check out the story here.

Mr. Kisliloski purchased a home and did everything right.  He hired a lawyer and made the usual arrangements to ensure that the final utility accounts would be paid by the vendor.  The problem developed when the City of Winnipeg determined that the water meter had been read and reported incorrectly by the previous owner for about 30 years and when the meter was finally read correctly, it gave rise to the gargantuan bill which, pursuant to a City of Winnipeg policy adopted in 1978, became Mr. Kisliloski’s responsibility.

It is comforting to know that there is a way for homeowners to protect yourselves from such a shock.  Covered Title Risk # 16 of FCT’s Platinum Homeowner Policy covers losses arising when “There are liens or charges incurred for public utilities supplied to the Land Prior to the Policy Date, except for charges you agreed to pay”.  While I have never seen a bill as high as $87,000, Mr. Kisliloski’s situation is not unique – in any case whether there have either been multiple incorrect readings or estimated readings, there is always a risk that the final water bill can be a shocker. However, with the protection of an FCT homeowner policy in place, homeowners can prevent the drain this type of situation can have on their finances.  Now if I could only get insurance against Instagram overload …

Oct 26 | 2015

Title insurance and the case of the trick and the treat

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halloween_smallHow title insurance protects against the evils of fraud

Fraud, in all of its forms, is a growing common problem in North America. And the real estate industry is no exception. FCT continues to pay out more as a result of title fraud than almost all other claim types. As mentioned in our previous blog post entitled The scary truth about title fraudFraud is a horrible crime with very scary consequences — both emotional and financial — for its victims.

The tale

Imagine this: a young man named Steven* worked hard for years to accrue significant savings, which were diligently put aside while looking for the best way to invest. After much thought, Steven decided to use the bulk of his savings and invest in real estate — what he and his advisors thought to be a safe bet. He purchased an income property for $204,500, and on the sage advice of his lawyer, an FCT homeowner title insurance policy as well.

The trick

Two years after the purchase, a notice was delivered to the property stating that the mortgage was in default and the lender would be taking possession of the property. Confused, Steven sought counsel as he knew that his mortgage was in good standing: he had never missed a payment! Was someone playing an evil trick? Or was it simply a mix up? Steven was beyond stressed, worrying about his investment and his credit rating.

Upon investigation it was revealed that the title had been fraudulently transferred from Steven as the insured homeowner and that the accompanying files did not contain any identification, nor any signed documentation. A new, fraudulent mortgage in the amount of $165,000 had been put on the property, paid to an unknown individual who, along with the funds, had disappeared into thin air . . . .

The treat

Luckily for Steven, he was covered. Because his lawyer had a thorough understanding of title insurance and recommended Steven purchase an FCT homeowner policy to complement the mandatory lender policy, he had comprehensive coverage to fall back on.

FCT paid out $12,548.09 in legal fees to remove the mortgage from title and transfer the rightful title back to him. Steven was able to retain his investment property, while being spared the time, expense and stress of having to defend his himself against the fraud. A huge treat indeed!

Don’t be a victim

We say this time and time again, but it bears repeating — you don’t have to be a victim of title fraud. FCT is your best line of defence against fraud and offers you:

  • Simple, effective title insurance solutions;
  • The best underwriters in the business; and
  • A certified fraud expert on staff.

To learn more about how to treat yourself to the peace of mind that comes from knowing you’re protected against the tricks of today’s fraudsters, comment below or contact us at one of the following numbers:

Homeowners call 1.877.888.1153
Lawyers call 1.866.804.3122

*Names and specific details may have been changed to protect the privacy of those involved.

Jul 8 | 2015

It’s time for British Columbia to see the value of title insurance

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house_foundation_smallWe are taught early on that saving money always makes good sense. But what makes more sense to you: saving a few hundred dollars on your home purchase by opting out of a title insurance policy, or saving $80,000 to re-pour your foundation? Hmmm, let’s think about that one for a minute…

A story out of British Columbia recently caught my interest. It is a contentious tale about a couple in Langley that has taken issue with the township after having to move the entire foundation of their dream home as the original was situated on their neighbour’s property.

Frankly, this type of story frustrates me as there is a very simple solution: having your client purchase a  homeowner title insurance policy along with the lender policy. I have personally approved claim payments for more than $80,000 in situations similar to the one that this Langley couple is facing. In fact, one of the risks covered by a homeowner’s title insurance policy is the risk that the homeowner will be forced to remove or remedy any of their existing structures because they encroach onto their neighbour’s land. This is exactly what happened to the Pett family.

In other provinces, both the owner and the lender are title insured in approximately 90% of all residential real estate purchase transactions. The lender policy protects the validity, enforceability and priority of the lender’s mortgage on the title; the homeowner policy protects the homeowner against losses associated with title fraud, survey and title issues/defects, as well as challenges against their ownership. Title insurance is unlike traditional insurance products — it does not just cover things that may happen in the future (e.g. title fraud), but also, title defects that have already occurred in the past, prior to purchasing the home, like this situation where the foundation was poured on the neighbour’s property.

However, in British Columbia (B.C.) it is less likely that the homeowner will obtain a title insurance policy —often there is only a lender’s title insurance policy in place. But for a relatively modest extra one-time premium (in some cases as little as $50) a homeowner can enjoy the benefits of a title insurance policy when purchased in conjunction with a lender policy. Yet for some reason, many legal professionals and homeowners still think title insurance is simply for lenders.

In many provinces, including Ontario, licensed legal professionals must discuss all options to protect a homeowner’s interest in title. This is not the case in BC and as such, B.C. consumers continue to be shortchanged when it comes to making informed decisions to protect their interests. While FCT has made significant progress concerning the education and awareness of title insurance in right across the country, clearly more remains to be done.

Let’s hope that the word continues to get out and we won’t see another situation like this one in Langley any time soon.

 

Jul 3 | 2015

Protect you and your new build with FCT’s newest endorsement

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Home ConstructionBuying a new build home certainly has some advantages over buying a resale home: you are able to choose the latest and greatest designs, as well as give it your own personal touch by choosing finishes, features and colours prior to construction. In many cases, when you purchase a newly built home you are backed by a warranty , and chances are that it will be a long time before you have to live through the stress of a major renovation.

On the other hand, buying a newly built home can have its disadvantages; not the least of which is the perpetual mud and dust that goes along with living in a construction site. FCT can’t do anything about the mud and dust, but we have taken an innovative approach to helping buyers of new homes by being the first title insurer to introduce an endorsement specifically addressing a major problem inherent to the purchase of a new home — construction delays.

We all know that construction projects do not always finish on time or as planned. Depending upon the time of year, some items in a new home may remain unfinished as of the closing date yet buyers are still obligated to close the transaction…  Things like decks, air condition systems and paving are all seasonal dependent and may remain incomplete until weather permits several months after closing.

On May 25, 2015, FCT was proud to introduce the Post Policy Construction Endorsement for New Homes nationwide (excluding Quebec). This endorsement advances the policy date of title insurance policies for new homes for one year for 14 of the covered title risks contained in the policy. Although FCT’s title insurance policy contains several areas of post-policy date coverage (for example losses arising from forgery or impersonation) and the general rule is that if it happens after the date of policy, it is excluded from coverage.  However, with this new endorsement coverage, the following is extended for one year after the closing date:

  • Encroachments;
  • Work orders;
  • Zoning by-law violations; and
  • Items constructed without a permit (amongst other things).

The extended coverage applies to improvements that were contracted for with the vendor prior to the closing date, but not completed at that time.

It is important to note that the new coverage is not a warranty or coverage that incomplete items will be completed and is probably best illustrated by the following example:

Sally and Bill Smith purchased a newly constructed home and closed the transaction in January. The Agreement of Purchase and Sale included a provision whereby the builder would install an air conditioner after the snow had melted and the weather permitted a proper installation. The air conditioner was installed pursuant to the Agreement in April. Unfortunately for Bill and Sally, their neighbour did not like where the air conditioner was located and thought it was too close to the property line, so he called the municipality to complain. The municipality attended the property to investigate and discovered that the air conditioner did in fact encroach into the setbacks in the zoning bylaw and ordered Bill and Sally to remove it. Without the Post Policy Construction Endorsement for New Homes there would have been no coverage because the air conditioner did not exist on the policy date. Instead the costs to relocate the air conditioner to the back of the dwelling where it would not violate the zoning bylaw were covered under the policy and Sally and Bill were able to enjoy their new home in air-conditioned comfort!

For more information on the coverage FCT provides to new homebuyers, please contact your Business Development Manager or call 1.866.804.3122 for more information.

Mar 10 | 2015

Title insurance — fraud protection and more

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fraud_and_more_smallAs a lender, when you make the decision to release funds, you need to know that your loan is well protected. Otherwise you and your organization could be at risk for losses associated with (but not limited to) the following:

•    Liens
•    Defects revealed by an up-to-date survey
•    Challenges to the enforceability or validity
of the mortgage
•    Title defects


With title insurance in place you can rest easier, knowing that you’re protected. And if you aren’t yet sold on its value, consider these real-life examples where title insurance saved the day.

Super priority lien
A title-insured mortgage went into default and the lender proceeded to sell the property. However, unbeknownst to the lender, the borrower had failed to remit GST payments to the Canada Revenue Agency (CRA). The CRA claimed priority over the insured lender’s mortgage so they were paid out first from the proceeds of the sale of the property. This resulted in a shortfall of over $20,000 for the lender. Because of the title insurance policy in place, the lender was reimbursed for the amount owing to the CRA as of the policy date, minimizing their potential loss in this situation.

Survey defects
A lender had approved a mortgage on a grocery store which then went into default. The lender attempted to sell the property to recover the debt, only to discover that in a previous transfer of the land, a portion of the land that included a parking lot and loading dock was never properly conveyed. Therefore, this parcel of land still belonged to the original owner, who offered to sell it to the insured lender at a highly inflated rate. He knew that without it, the lender’s sale of the grocery store would be difficult. Since no agreement could be reached, FCT stepped in and compensated the lender for a reduced purchase price for the mortgaged land. The original owner later negotiated the sale of the parking and dock areas at a fair market price and no one suffered a loss thanks to FCT’s involvement.

Mortgage enforceability
A lender had issued a mortgage for just under $1M to a husband and wife. When the mortgage went into arrears and the lender attempted to contact the mortgagors, the wife advised the lender that she and her husband were currently in the middle of a highly contested divorce settlement and that she had never signed any mortgage documents. Because it was arranged without her knowledge or consent, she claimed that the mortgage was unenforceable. Since the lender had insisted on the mortgage being titled insured when they approved funding, FCT covered them for the legal costs of defending the enforceability of the mortgage and the loss as a result of negotiating a settlement with the wife.

Title and/or legal description defects
A mortgage in the amount of $110,000 was in arrears and the lender commenced a power of sale to try to recoup their investment.  Once the proceedings were underway, the lender was advised by legal counsel that there was a life interest registered on title, making it impossible to sell the property until that individual was either paid out or signed off on the sale. Since the holder of the life interest had since passed on, FCT retained and paid for counsel on behalf of the lender to delete the life interest from title. The sale went ahead as planned and lender was able to avoid a loss.

Do you have any fraud stories or prevention tips you’d like to share? Feel free to comment below.