Hello and welcome to The Title Page! This is the first in a series of articles aimed at giving you a better understanding of all things pertaining to commercial title insurance. For this premier edition, we thought we’d start with the basics: a title insurance 101, if you will.
When title insurance became widely available in Canada some 20+ years ago, there was a feeling by many that there was no need for that particular American-based product in Canada. The argument was that the Canadian title system was very good (as opposed to some of the states in the US) so there would be no use for title insurance in our country. And in all honesty, that position was somewhat warranted — we generally do have much better land registry systems than they have in the United States.
But, what many people failed to realize is that although the title insurance policies issued in Canada are similar in many ways to what are issued in the US, the due diligence required to satisfy the title companies in Canada is significantly different. This makes some benefits of title insurance much more important north of the border. Also, there is much more to the coverage than just “title” issues.
In Canada we decided to take a brand new approach to how title insurance could add value to real estate transactions. We looked at the due diligence steps in a transaction that were time consuming and assessed whether or not there was an opportunity to take on some of that risk given that these items often add little value. In doing so, we’ve provided lawyers with a way to close transactions in a matter of days versus many weeks, depending on the nature of the transaction. The need for surveys, certain off-title searches and zoning reports has been minimized, greatly reducing and streamlining work efforts while creating greater efficiencies and better protection.
As an example, most title insurance companies in Canada do not require a survey in order to provide full survey protection to lenders, regardless of the amount of the mortgage loan. And some extend that same coverage to owners/purchasers of commercial properties for deals up to $10 million. In the US, however, that’s virtually unheard of. In the US, title companies regularly require a survey to be completed prior to providing coverage, and the level of detail required in those surveys (usually referred to as an American Land Titles Association or “ALTA” survey) is well beyond what we normally see in Canada.
Coming soon . . . .
Over the next few months I will be writing articles on a number of areas or issues where title insurance has been used in commercial transactions. And I think you will be surprised by the breadth and depth of coverage options and the benefits available to you. You might also find it interesting to hear about title insurance used on Aboriginal Lands, leasehold properties, coverage on construction loans and the coverage with respect to CRA super-priority lien claims. Plus, we’ll drive home the advantages of title insurance with real-life claims stories and examples of the coverage in action. So, stay tuned. There is much more to come from The Title Page!