Real Estate Claims, Title Insurance & SurveysAOLS

May 31, 2017

© 2017 Lawyers’ Professional Indemnity Company 1

REAL ESTATE CLAIMS,TITLE INSURANCE

& SURVEYSRAYMOND G LECLAIR

VICE PRESIDENT, PUBLIC AFFAIRS @ LAWPRO

MAY 31, 2017

AGENDA

• LAWYERS’ MALPRACTICE REAL ESTATE CLAIMS

• STATISTICS

• REASON FOR CLAIMS

• EVOLUTION & IMPACT OF TITLE INSURANCE

• ROLE OF SURVEYS/SURVEYORS

WHAT IS LAWPRO?

• FULL-FLEDGED LICENSED INSURANCE COMPANY

• INDEPENDENT AND DISTINCT FROM LAW SOCIETY OF UPPER

CANADA

• GOVERNED BY ONTARIO INSURANCE ACT, ONTARIO

CORPORATIONS ACT, AND OTHER APPLICABLE LEGISLATION

• INSURE OVER 26,000 ONTARIO PRACTITIONERS

• MANDATORY, EXCESS AND TITLE INSURANCE

• RISK MANAGEMENT & PRACTICE AIDS - PRACTICEPRO

LAWPRO CLAIMS BY AREA OF LAW (COUNT 2006-2016)

Litigation35%

Real Estate27%

Corporate8%

Wills/Estates8%

Family8%

Employment2%

IP2%

Construction Liens2%

Criminal2% Tax

2%

Other4%

LAWPRO CLAIMS BY AREA OF LAW (COST 2006-2016)

Litigation30%

Real Estate29%

Corporate15%

Wills/Estates8%

Family5%

Employment1%

IP1%

Construction Liens1%

Criminal1%

Tax4%

Other5%

‘GLOBAL’ DESCRIPTIONS OF LOSS(2006-16 BY COUNT)

Communication31%

Time Management19%

Inadequate Investigation

18%

Error of Law13%

Clerical7%

Conflict of Interest4%

Fraud2%

Other6%

Real Estate Claims, Title Insurance & SurveysAOLS

May 31, 2017

© 2017 Lawyers’ Professional Indemnity Company 2

‘GLOBAL’ DESCRIPTIONS OF LOSS(2006-16 BY COST)

Communication33%

Time Management14%

Inadequate Investigation

17%

Error of Law17%

Clerical3%

Conflict of Interest8%

Fraud5%

Other3%

REPORTED CLAIM COUNT BY CAUSE OF LOSS BY FUND YEAR

REAL ESTATE CLAIMS (2006 TO 2016)

Communications41%

Time Management2%Inadequate Investigation

28%

Law6%

Clerical8%

Conflict of Interest5%

Fraud6%

Other4%

MALPRACTICE CLAIMS FACT SHEETS

HISTORY

• AVAILABLE IN THE UNITED STATES 100+ YEARS

DRIVEN BY:

• STATE OF TITLE INFORMATION AND DOCUMENTATION

• FIRE AND OTHER DESTRUCTIVE EVENTS

• LACK OF CENTRALIZATION OR ORGANISATION

• LENDER’S PREFERENCE FOR STANDARD TITLE GUARANTY FOR

SYNDICATION

HISTORY IN CANADA

• FIRST INSURER LICENSED ACROSS CANADA IN 1991

• TITLEPLUS COMMENCED OPERATIONS IN 1997

• GROWTH DRIVEN BY:

• ALTERNATIVE FOR SURVEY

• LESSER SEARCH REQUIREMENTS REDUCED OUT-OF-POCKET COSTS

FOR OFF-TITLE SEARCHES

• COMFORT WHEN SHORT TIMELINES PREVENT OBTAINING SEARCH

RESULTS

Real Estate Claims, Title Insurance & SurveysAOLS

May 31, 2017

© 2017 Lawyers’ Professional Indemnity Company 3

• AN ALTERNATIVE METHOD OF ASSURING GOOD TITLE

• AN INSURANCE POLICY THAT PROVIDES PURCHASERS AND

MORTGAGE LENDERS WITH PROTECTION AGAINST

SPECIFIC TITLE RISKS

• RESIDENTIAL AND COMMERCIAL – ALSO EXISTING OWNER

WHAT IS TITLE INSURANCE?

(RESIDENTIAL / COMMERCIAL)

• DEFECTS IN TITLE ENUMERATED RISKS

• COMPLIANCE RISKS EXCLUSIONS

• ACCESS, OTHER RIGHTS & DEFECTS GENERAL TERMS AND

CONDITIONS

SCOPE OF COVERAGE

• RATIONALE FOR PURCHASE OF MANY TITLE INSURANCE POLICIES

• PURCHASER V. LENDER COVERAGE - WHY IS THERE A VARIANCE?

• NOW FRAUD IS AN IMPORTANT MOTIVATOR FOR GETTING TITLE

INSURANCE

SURVEY COVERAGE

• CLIENT’S POLICY AND NOT LAWYER’S POLICY

• EXPANDED COVERAGE (BEYOND LAWYER’S NEGLIGENCE)

FRAUD

THIRD PARTY ERRORS

SURVEY ISSUES

SPOUSES AND HEIRS

• FACILITATES CLOSINGS

HOW TITLE INSURANCE BENEFITS CLIENTS

• DIRECT CLAIMS AGAINST INSURER

NO NEED TO LOCATE AND SUE A LAWYER

NO CONCERNS ABOUT LAWYER’S E & O COVERAGE

• DUTY TO DEFEND

• COST SAVINGS

• ALTERNATIVE ACCOMMODATION COVERAGE

BENEFITS (CONT’D.)

WHY IS TITLEPLUS DIFFERENT?

• TWO INTEGRATED COMPONENTS

TITLE INSURANCE

LEGAL SERVICE COVERAGE: ERROR OR OMISSION BY LAWYER FOR

WHICH LIABILITY IS IMPOSED BY LAW

• SINGLE POLICY FOR BOTH PURCHASER AND LENDER

Real Estate Claims, Title Insurance & SurveysAOLS

May 31, 2017

© 2017 Lawyers’ Professional Indemnity Company 4

SURVEY COVERAGE IN TITLEPLUS POLICY

• ONLY INSURES IF SUFFER ACTUAL LOSS

• DEFECTS IN TITLE

• ANYONE ELSE HAVING AN INTEREST IN YOUR LAND NOT DISCLOSED BY REGISTERED TITLE;

• ANY VIOLATION, VARIANCE OR ADVERSE CIRCUMSTANCE THAT WOULD HAVE BEEN

DISCLOSED BY AN UP-TO-DATE SURVEY;

• COMPLIANCE RISKS

• AN ORDER BY A COURT … AFTER POLICY DATE FORCING YOU TO REMEDY … BREACH OF

ZONING BY-LAW;

• ANY ENCROACHMENT OR SETBACK DEFICIENCY WHICH YOU ARE BEING FORCED TO

REMEDY BY A COURT …, EXCEPT FOR THOSE RELATING TO A FENCE OR BOUNDARY WALL;

TRENDS

• ORIGINAL AND CONTINUING ATTRACTION OF TITLE INSURANCE AS

“SUBSTITUTE” FOR SURVEY

• GREAT COST SAVING (AT LEAST SHORT TERM!)

• LACK OF TIME BETWEEN OFFER AND CLOSING – REAL ESTATE AGENT

EDUCATION REQUIRED

• LACK OF EDUCATION OR CONCERN BY PURCHASERS AS TO THE DIFFERENCE

• NOW SEEING CLAIMS BASED ON “NOT ADVISING” THE PURCHASER

TO GET A SURVEY

• TWO REALITIES:

• LAWYER DID NOT ADVISE

• LAWYER DID ADVISE BUT HAS NOTHING TO BACK UP THE ADVICE

TRENDS

• PUBLIC IS STARTING TO UNDERSTAND VALUE OF A SURVEY

• SMALL COST FOR INFORMATION TO AVOID POTENTIAL PROBLEM (MORE

EDUCATION NEEDED)

• PERCEPTION - MOST PURCHASE AND SALE CLOSE WITHOUT ANY PROBLEM

• DILEMMA - IF I KNOW ABOUT THE PROBLEM:

• WHAT CAN BE DONE ABOUT IT, TIME TO DO IT, WHO PAYS?

• HAVE NO TITLE INSURANCE COVERAGE!

• REPUTATIONAL RISK FOR LAWYERS

• ALLEGATION LAWYER DID NOT DO THEIR WORK!

YOUR MISSION (SHOULD YOU CHOOSE TO ACCEPT IT)

• NEED TO OVERCOME THE “UBER” ATTITUDE OF THE PUBLIC

• EDUCATION OF THE BENEFITS OF A SURVEY

• EDUCATION OF THE VALUE OF A SURVEY

• BETTER EQUIP LAWYERS & REAL ESTATE AGENTS TO SELL CLIENTS

ON BENEFITS OF SURVEY

• MAKE YOUR OLD SURVEYS AVAILABLE

• CONGRATULATIONS ON YOUR DIRECTORY – BUT NEED ALL OLD SURVEYS!

• IF SEE OLD SURVEY, MAY SEE NEED FOR A NEW SURVEY!

• NEED TO RECREATE THE NEED FOR A SURVEY

RESOURCES

• IS A REAL PROPERTY SURVEY STILL REQUIRED?

• HTTP://AVOIDACLAIM.COM/2017/IS-A-REAL-PROPERTY-SURVEY-STILL-REQUIRED/

• TITLE INSURANCE COVERAGE IS LIKE A BOX OF CHOCOLATES – NO TWO POLICIES

ARE THE SAME

• HTTP://WWW.PRACTICEPRO.CA/LAWPROMAG/TITLE_INSURANCE_DIFFERENT_POLICIES.PDF

• A FOOT IN THE DOOR: A CLASSROOM RESOURCE ON REAL ESTATE AND HOUSING

LAW IN ONTARIO

• HTTP://AVOIDACLAIM.COM/2015/A-FOOT-IN-THE-DOOR-A-CLASSROOM-RESOURCE-ON-

REAL-ESTATE-AND-HOUSING-LAW-IN-ONTARIO/

Real Estate Claims, Title Insurance & SurveysAOLS

May 31, 2017

© 2017 Lawyers’ Professional Indemnity Company 5

Public Awareness Campaign

3 Videos

18 Matte Stories

2 Audio files

For information on how to add these to your website, contact ray.leclair@lawpro.ca

http://www.titleplus.ca/real_simple_real_estate_guide/helpful_resources.html

QUESTIONS?

RAYMOND G LECLAIR, LL.B.

VICE PRESIDENT, PUBLIC AFFAIRS, LAWPRO

(416) 598-5890 OR 1-800-410-1013

RAY.LECLAIR@LAWPRO.CA

WWW.PRACTICEPRO.CA AND WWW.LAWPRO.CA

BLOG: AVOIDACLAIM.COM;

LAWPRO IS ON LINKEDIN & FACEBOOK

TWITTER: @LAWPRO AND @PRACTICEPRO

CONNECT WITH ME:

• LINKEDIN: RAYMOND G LECLAIR

• TWITTER: RAYLECLAIR