Residential title insurance is there to protect you
Residential Title Insurance is little known in Quebec but is gaining in popularity. It offers a range of protections that can notably cover homeowners against losses linked to real estate fraud by impersonation – identity theft. It can also offer protection for several other problems. Examples are titles of a property or irregularities that could be raised in a certificate of location. Encroachment of a swimming pool in a Hydro-Québec servitude is cause for Title Insurance.
Identity theft on a home
According to an article that was published in La Presse on February 4, 2020, Title Insurance is becoming necessary for homeowners.*
A recent story occurred where a house was sold without the owner’s knowledge. The victim and her late husband, who died a few weeks before the fraud, were victims of identity theft. The owners did not live on the property; it was rented. Fraudsters created falsified documents and successfully fooled the professionals into the sales transaction. The victim’s son discovered the fraud while checking in on the house. He retrieved a surveyor’s business card that was left at the door of the property. After contacting him and realizing that something was suspicious, he investigated further in the Land Register and discovered the fraudulent sale transaction. Subsequently, the true owners lodged a complaint to the police and the buyers did as well because they were unaware of the fraud. The buyers bought the property at a discount to do a real estate flip.
In addition to the criminal complaints, the true owner took Civil Action to recover his property, incurring legal fees of approximately $40,000.00.
In the La Presse + article, Sylvain Paquette, president and fraud analyst at the Canadian Credit Bureau, explains that this type of fraud is very easy to do. He said fraudsters favor mortgage-free properties where homeowners are often absent (for example, “snowbirds”). Mr. Paquette also adds that with the rise in frauds in Quebec, all owners should take advantage of Title Insurance to protect themselves against this type of fraud.
Identity theft happens frequently without our knowledge at first. Such a situation can cause many inconveniences as well as generate significant legal costs to correct the situation and, ideally, to recover its ownership.
Had the owners of the building taken a Title Insurance, they could have benefited from coverage for this purpose, unless an exception as specified in this regard. They, therefore, had to bear the lawyers’ costs, which represented approximately $40,000.00, out of their savings.
Thus, for a property owner in Quebec to benefit from greater protection in connection with your property title, it is highly recommended to take out Title Insurance.
Other important benefits with Title Insurance are zoning issues not disclosed by a Certificate of Location, lack of building permits, encroachments of sheds, garage, pools, etc., illegal views, irregularities with a certificate of Location, mortgage lean from a sub-contractor as a result of unpaid work from renovations.**
Work performed without a permit
Here is an example to illustrate 2 encroachments: An FCT insured customer received an invoice for work that was carried out without a permit and not in compliance with existing by-laws. The city wanted the above-ground pool removed and the patio expansion adjusted. FCT agreed to provide the insured with an indemnity of approximately $7000.
In a 14 unit condo, it was discovered that the zoning by-laws prevented them from enjoying a substantial size of land around the building. Luckily 3 of the co-owners were insured with FCT. FCT agreed to award each owner approximately $5000 in compensation.
Renovation not compliant
A notice of non-compliance was submitted to an FCT Title Insurance policyholder in a condo. The notice informed the co-owner to remove the balcony cladding which was non-compliant with the Declaration of Co-ownership. The claim was made to FCT and compensation to remove the balcony cladding of $5000 was honored.
- If you are selling a property with No Legal Warranty it is prudent to take out a Title Insurance policy to pass onto the buyers.
- If you are a landlord you should have Title Insurance on your rented properties.
- If you choose to sell on your own, you must have Title Insurance because the buyer’s lending institution will require it.
There are several Title Insurance companies you can contact. However, as a REMAX broker, I offer a preferential rate with FCT Title Insurance. Please click on the links below for more information or contact me for more details. The fees are a one time cost and extremely affordable in exchange for the headaches and stress that can come from problems with titles, etc.
*Source of the La Presse article: Me Dominique Vassart, lawyer, Alepin Gauthier Avocats Inc. **FCT Title insurance