Title insurance is certain protection against uncertain issues

Feb 13, 2014 by

12012-44th-Street-SEIn my two previous posts (1) & (2), I have examined the features of title insurance and the advantage of having a policy in place to streamline the closing process.

But what about after your client’s commercial real estate deal closes? What happens when unknown issues affecting the property or title arise then? Unbeknownst to many, this is another time where title insurance can prove highly valuable in protecting their commercial investment.

As a follow-up to my recent posts, I have, once again, asked Sandi Sheppard at FCT for insight. Below are several real-life claims examples that clearly illustrate how commercial title insurance can save the insured time, money and the stress involved in having to defend their right of ownership.

Third party interest in title A developer purchased a commercial property from a corporation. Soon after closing, the sale was contested by a member of the selling corporation’s board of directors, claiming the rules of disposition were not followed and the property was sold unlawfully. Litigation ensued between the two opposing parties, one of which named the insured — the developer — in the lawsuit. FCT successfully defended the developer’s ownership of the land, at no cost to the insured, and they were eventually removed from the lawsuit entirely.

Municipality errors The insured purchased a commercial property with plans to re-develop the land.  Prior to finalizing the purchase of the property, the purchaser sought approval from the municipality for its development plans. The municipality provided confirmation that the land could be developed for the purchaser’s intended purpose and the sale proceeded. After closing, the insured was subsequently notified by the municipality that there was an error and applying for re-zoning was not an option. As a result, the land could continue to be used as is but could not be developed as intended. The insured received a claim settlement from FCT for the loss in property value resulting from the incorrect response from the municipality. With the claim settled, the insured had the choice to use the property in keeping with current zoning, or sell the property without incurring a financial loss.

Unknown compliance issues Prior to closing, the insured purchaser obtained a letter from the fire department confirming fire safety compliance based on local fire department regulations. After closing, the fire department notified the insured of deficiencies related to the sound level measurement of the signaling device. The deficiencies needed to be corrected for the property to comply with the provincial fire code.  FCT covered the cost to make the repairs to the signaling device to bring the property up to code.

Subhead: Protect against the unknown with commercial title insurance

The reality is that a host of unknown issues can emerge after closing that can result in significant cost and stress. For a one-time premium, a commercial title insurance policy protects the owner of the property against actual loss or damage for covered risks for as long as they own the property.  In addition, the policy provides a duty to defend.  This means the title company will pay costs, legal fees and expenses incurred in defending owners against a claim based on a covered risk.  Title insurance helps your clients rest assured that their investments are well protected, both before and after closing.

To learn more about how title insurance can protect your client’s commercial investments, please visit www.FCT.ca

 †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.

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