Title Insurance to Help Protect Your Commercial Real Estate Investment in the Calgary Industrial Market

May 27, 2013 by

Had opportunity to sit down with Sandra Sheppard, Director Business Development of FCT who are title insurance providers to the Canadian Real Estate market.  Not familiar with Title Insurance?  Well here is as description of title insurance courtesy of Sandra Sheppard.

What is commercial title insurance? †

One of your lawyer’s most important responsibilities is to ensure that you have “good title” to the property you purchase.  Good title means that your ownership interest in the property is properly and accurately registered, and that it is free of unknown claims or liens against it.  Your lawyer makes certain that you will be able to sell your property in the future without legal difficulties.  The result of your lawyer’s efforts is an opinion that provides confirmation that you have good title to the property.

Title insurance is designed to complement your lawyer’s work by offering coverage across a wide range of title and off-title risks; some of which legal opinions are unable to address (e.g. errors in public records, fraud & forgery, gap coverage, etc.).

For a one-time premium, a commercial title insurance policy is an insured statement as to the condition of the property as of the date the deal closed (date of policy).  It protects you, as the owner of the property against actual loss or damage sustained as a result of title and many off-title issues.

Additionally, the title insurer has an obligation to cover any legal expenses that result in defending your interest in the property if it is challenged for a covered risk.  Legal fees incurred under this ‘duty to defend’ provision do not reduce the amount of coverage available under the policy – in other words, the duty to defend is a benefit over and above the insured amount.

If an issue does arise, title insurance claims are handled quickly and easily with a no-fault claims process.

What is covered under a commercial title insurance policy?

The most common challenges covered under a typical owner’s policy include, but are not limited to the following:

Surveying issues such as encroachments, non-compliance with setback requirements and rights-of-way that would have been revealed by an up-to-date survey or real property report of the property.  If there is an existing survey or real property report, there is coverage if it is inaccurate.

Errors in public records (e.g. registry/land titles offices) and responses received from governmental authorities that relate to the land (e.g. municipal work orders, unregistered hydro easements, conservation authority, health department, etc.).

Failure of the use of the insured land at the date of policy to be a permitted use, under applicable zoning bylaws.

Intervening registrations between closing and the date the security documents are registered.

 Fraudulent acts that occurred prior to the date the deal closed or in the insured transaction.

Previous non-compliance with subdivision/development/site plan agreements.

Known title defects/title problems – title insurance insures against many unknown title risks, but can also provide coverage for existing defects made known at the time of purchase.  Known defects must be disclosed to the title insurer so that the insurer has the opportunity to underwrite the problem.  In many instances, the insurer may be prepared to assume the risk in the event of a loss.  A known defect does not have to mean the end of a deal when the proper coverage is in place.

†All content herein has been provided by FCT with their permission to reproduce and publish it in this blog.  FCT is the brand name for a group of companies that includes Canada’s leading title insurer.  Commercial title insurance is provided by First American Title Insurance Company (Canada Branch).  The content provides general information only.  For specific coverage and exclusions refer to the applicable policy – copies can be obtained from the insurer.  This content has been provided for your own internal business purposes and should not be reproduced or published outside of your organization without the consent of FCT.