WHY AND WHEN TITLE INSURANCE?

Posted in: Real Estate- May 05, 2014 Comments Off on WHY AND WHEN TITLE INSURANCE?

If you’re buying a new home or recreational cabin in B.C., you might wonder if you should get title insurance. What protection do you get if you shell out the one-time premium for this?

Title insurance started as a fix for problems with old-England style land transfer systems in some U.S states. It insures buyers or lenders against potential loss of title (i.e., ownership of the property you’re buying) and problems with the title. Now a billion-dollar industry in the U.S., it has also for years been available in Canadian provinces like Ontario and B.C.

But B.C. has a government-backed, Torrens-inspired land title system that “guarantees” your title. It’s like the Mercedes of land registration systems. In B.C., you can generally rely on the accuracy of the register in the Land Title Office as to who the owner is and what registrable charges are outstanding. To deal with the possibility of losing title through fraud, a provincial assurance fund pays financial compensation in appropriate cases (not an easy process though).

Before the arrival of title insurance here, the B.C. system worked well for many decades, and is usually considered just fine for everyday, normal transactions.

The occasional title and mortgage fraud cases get a lot of press. But they’re rare. In the last two decades, only some 17 title or mortgage fraud claims have reportedly been paid from B.C.’s assurance fund, out of 16 million real estate transactions processed by the Land Title Office.

And as between innocent defrauded home owner and bank or mortgage lender, where (unbeknownst to the true owner) a fraudster transfers title to an accomplice (who then takes out a mortgage and disappears with the money), the lender now bears the risk of loss.

So is title insurance worth it for you in B.C.?

Banks like it. Recent high-level B.C. court decisions saddling mortgage lenders with the risk of mortgage fraud have given banks and lenders an incentive to get borrowers to opt for a lender’s policy. However, such a policy, though paid by you, only protects the lender.

So if you’re getting a mortgage to finance your home purchase, the bank may allow you to buy a lender’s title insurance policy instead of a new survey, which could be more expensive. (Another alternative is having the bank accept a short-form “protocol” legal opinion – this too would save the survey cost and protect the lender.)

Still, you might want to consider an owner’s policy for yourself (for which you pay a separate premium). In addition to insuring your title to your new property, it would offer benefits, such as covering you in case of previously unknown defects that a new survey would have shown.

As well, title insurance would cover you for other problems you might run into – as a sampler, construction done by the previous owner(s) without proper permits (unauthorized accommodations or other “after-the-fact” improvements come to mind); zoning, land-use or building by-law infractions; and set-back problems. A new survey wouldn’t show most of these problems, which could be costly to fix.

While you, as a buyer, should generally get a new property survey, title insurance may also be worth it. Being an insurance product, it has exclusions. Talk to our lawyers to get a better understanding of it and find out if it’s a useful product for your particular transaction.

 

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.

Protect Yourself Against Under-Insured Drivers

Posted in: ICBC / INJURY- Apr 03, 2014 Comments Off on Protect Yourself Against Under-Insured Drivers

If someone hurts you in a car accident, they might have insufficient insurance – or no insurance at all – to compensate you for your injuries.

In BC, drivers are legally required to buy liability coverage from ICBC to pay for the injuries for anyone they hurt in a car accident. Under the Basic Autoplan package, the standard minimum is $200,000.

But if you’re seriously injured, you may be entitled to much more than that. Say you’re in hospital for a month, then have to recuperate at home for six months, and then need to scale back at work indefinitely when you do return or can’t work at all. You could have a very significant loss of income claim, not to mention other losses like pain and suffering.

With your Basic Autoplan package, you automatically get up to $1 million of Underinsured Motorist Protection (UMP) – meaning your insurance (subject to certain deductibles) will pay any balance up to $1 million, if the other driver only has the $200,000 liability coverage and your claim exceeds that liability limit.

But for a very modest sum – an extra $25 – you can increase your protection to $2 million. You can buy what’s called Excess Underinsured Motorist Protection. It’s a good deal, considering the benefits and peace of mind you receive.

It covers you, plus any passengers with you, when driving your own vehicle. It also covers you no matter what vehicle you’re driving at the time – so you’re covered if you happen to be driving your husband’s car when involved in the accident. And it covers members of your household riding in any vehicle that they don’t own. You also don’t have to be in a car to be covered – you get the same protection if you’re a pedestrian or cyclist mowed down by a vehicle.

Your Excess UMP (and UMP) coverage also applies throughout Canada and the US, so if you’re hurt in an accident in Seattle, you’re still covered.

When you go to buy your Autoplan, make sure to ask for “Excess UMP.” The agent won’t automatically offer it; you must ask for it.

By the same token, you may want to buy extra liability insurance to cover you if you’re the one responsible for an accident where someone else is hurt. If you only have the minimum $200,000 liability coverage, you could be on the hook for much more if the person you hurt suffers serious injuries. Say they receive a court judgment against you for $500,000. Through ICBC, they could come after your house and other property or investments you own to help pay the $300,000 balance of the judgment.

To protect you in these circumstances, ICBC offers Extended Third Party Legal Liability insurance, where you can buy up to $5 million worth of coverage.

Hopefully, you won’t ever have to make use of your Extra UMP or Extended Third Party Legal Liability coverage. Of course, if you are hurt in an accident, you should see a lawyer, even if your injuries are minor. Sometimes even minor injuries can bother you for some time or flare up after you think they’re resolved. A lawyer can advise you about the value of your claim and your insurance coverage, protect your interests when negotiating with ICBC, and help you receive a fair settlement in the circumstances.

 

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.

CONDO BUYERS! HELP FOR DELAYS & OTHER PROBLEMS

Posted in: Real Estate- Mar 07, 2014 Comments Off on CONDO BUYERS! HELP FOR DELAYS & OTHER PROBLEMS

Interested in buying a condo? For some attractive-looking condo projects, buyers often sign a purchase contract for a unit well before construction starts. It’s not uncommon, however, for the development to be delayed and for the building not to be ready on the expected date. The purchase contract may anticipate this happening and allow the developer to shift the unit’s completion date to a later date by giving you notice. But does this mean that you – faced with not having a place to move into when planned, as well as with an uncertain condo market – have no  recourse or protection?

 

Not necessarily. Consider this recent BC appeal court decision which looked at REDMA and helped one buyer.

 

REDMA is the Real Estate Development Marketing Act. It is consumer protection legislation for buyers of “development units” such as condo units (and also subdivision lots and timeshares). A developer who wants to market condos well before construction starts has to file a “disclosure statement” with the Superintendent of Real Estate and also give the disclosure statement (and any amendments) to a buyer by a specified time. The information the condo developer must put in a disclosure statement includes the estimated project completion date. If there’s a misrepresentation in the disclosure statement that the developer becomes aware of, the developer has to prepare an amendment or a new disclosure statement, which they also have to file with the Superintendent and give to buyers.

 

In the recent case, the buyer signed a contract for an expensive luxury Vancouver condo unit in August, 2007. The $1,136,000-plus deposit was to be paid in five installments, and she paid the first two installments totalling $284,000. She was given copies of the May, 2006 disclosure statement and the only amendment to it. The developer, however, knew well before the buyer signed the contract that the project wouldn’t actually be finished by the estimated September, 2009 completion date set out in the disclosure statement. But the developer never filed an amended disclosure statement to reflect this change.

 

When she signed, the buyer was informally aware that the development completion date would be somewhat later, about November or December, 2009. But the project’s completion was further delayed. An occupancy permit for her unit was only issued January 25, 2010. (In the meantime, the purchase contract was amended to reflect a later closing date for the unit, which the developer shifted to January 27, 2010 as allowed under the contract.)

 

The buyer refused to go through with the purchase. So the developer sued for the full deposit, while the buyer wanted to get back the $284,000 portion she had already paid.

 

The BC Court of Appeal decided that REDMA spells out what amounts to a misrepresentation and that REDMA required the developer to file an amendment immediately once they knew the disclosure statement was wrong as to a material fact (here, the completion date). Because the developer didn’t do this, it didn’t comply with the consumer protection law, and the purchase contract was unenforceable. The buyer got her deposit back, with interest.

 

Of course, any particular case will depend on its own unique facts. But if you’re faced with problems involving a pending condo (or other development unit) purchase, whether it’s construction delays or other issues, and you want to know your options, consider consulting one of our lawyers.

 

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.