Coverage You Can Count On 

Missing Access

Our insured homeowners accessed their residential property via a driveway thought to be theirs. When the adjacent neighbouring property was later sold, the new owner had their property surveyed which disclosed that our insureds’ driveway encroached onto the neighbours’ property. The new neighbours refused to allow our insureds to continue to have access to the driveway.

Our insureds obtained their own survey which confirmed that the driveway was not on their property. It was also discovered that their property abutted two roadways which became an issue, as one of the roadways was an undeveloped 80-foot long rock bluff and the other roadway was on a substantially different elevation than the insureds’ property. Our insureds had legal access to their property, but not actual access.

Coverage in Action: Stewart Title reimbursed the insureds more than $9,000 for the costs to have one of the roadways developed so that they had actual access to their property.

Outstanding Water Arrears

Shortly after closing, our insured received a water bill showing interest and arrears in the sum of $4,900. An investigation into the matter revealed that the previous owner had not paid water charges for 25 years and the municipality had never cut off the water supply to the property.

Coverage in Action: Stewart Title confirmed coverage and paid the water arrears and interest owed by the previous owner.

Canada Revenue Agency Deemed Trust

A borrower was in default of an insured mortgage and our insured lender was selling the property under power of sale. Prior to the completion of the lender's power of sale proceedings, they received a notification from the Canada Revenue Agency (CRA) claiming a super priority lien on the property. As a result of the lien claimed by the CRA, the lender would experience a deficiency in its recovery.

The notice was with respect to arrears of source deductions for Canada Pension Plan and Employment Insurance remittances. The amount claimed was over $35,000.

Coverage in Action: The Lender was able to confirm with the CRA that prior to the advance of the mortgage, $12,000 of the $35,000 was deemed to be owed by the borrower for source deductions. Upon sale of the land, the lender remitted the amount of the super priority liens to the CRA. Stewart Title reimbursed the insured lender $12,000 (the amount of their loss) as a result of the portion of the super priority lien which arose prior to the mortgage being advanced.

Fraudulent Transfers by Family Member

An individual who owned a significant number of mortgage-free commercial properties, lived with his adult son. The son, who shared the same name as well as the same address as his father, impersonated his father and fraudulently transferred the commercial properties to co-conspirators. The son then paid his co-conspirators to obtain mortgages from private lenders.

Upon discovering the frauds perpetrated by the son, the father initiated proceedings to have the mortgages declared invalid and removed from title. Many of the lenders in these mortgage transactions had obtained title insurance policies from Stewart Title.

Coverage in Action: Stewart Title investigated the insured lenders’ claims. It was found that the mortgages were invalid and Stewart Title paid the insureds’ losses suffered as a result. To date, Stewart Title has paid more than $2,500,000 to insured lenders that were victims of this individual’s frauds.

Stolen Identity

Shortly after the insured lender advanced the funds on a purchase transaction, it was discovered that the mortgage had gone into default. The lender’s investigation revealed that a fraudster had impersonated the true owner of the property and purported to “sell” the home to his friend (another fraudster). The lender believed it was financing a legitimate arm’s length purchase transaction. Both fraudsters had supplied fraudulent documentation to their lawyers. The fraudster stole the mortgage proceeds obtained under the guise of a fake purchase/sale transaction.

Coverage in Action: Stewart Title paid more than $340,000 to the insured lender, as the insured mortgage was unenforceable against the true homeowner who had been the victim of identity theft.

Corporate Mortgage Fraud

A legitimate corporate owner was impersonated by a fraudster who filed a forged notice of change, appointing himself as the director of the corporation. The fraudster then applied for a first mortgage on a previously mortgage-free property and the mortgage was insured through a Stewart Title lender policy. Shortly after closing, the mortgage went into default and the fraud was discovered when the insured lender initiated mortgage enforcement proceedings.

Coverage in Action: Stewart Title paid $876,000, (the amount owed on the fraudulently obtained mortgage), in order to resolve the claim for the insured lender.

Two Legal Descriptions

Stewart Title insured the purchase and mortgage of a property. When the property was to be sold several years later, it was discovered that the property was actually made up of two different legal descriptions; one for the leasehold interest and one for the freehold interest. Inadvertently, the transfer and mortgage were only ever registered against the leasehold interest even though our insured owners intended to purchase both the freehold and leasehold interest and the lender intended to mortgage those same interests. The property could not be sold until title was corrected so that the insured owners would own both interests, and that the insured mortgage would be registered against both titles. A claim inquiry was made under the owner’s policy.

Coverage in Action: Stewart Title hired counsel to attend court and correct the title by obtaining title to the freehold interest, thereby allowing the sale of the property to close in a timely manner.

Deficient Recitals in Legal Description

Our insured homeowner was selling his property when the buyer’s lawyer requisitioned the correction of an improper recital in the chain of title regarding a beneficiary’s rights when the property was transferred from an estate. The issue was that there were no affidavit materials registered on title in support of the recital.

Coverage in Action: By law, this title issue would be resolved on its own after a period of a few years assuming the beneficiary did not make a claim against the title. Accordingly, Stewart Title provided custom underwriting to the buyer in the event that the beneficiary did make a claim against title before the ability to do so lapsed. As a result, the transaction was able to close on time and no delays were experienced in attempting to rectify the issue before closing.

Condo Construction Lien

Our insured homeowner purchased a newly completed loft. Unbeknownst to him, there was an existing construction lien registered against his and all other units in the building for work completed to the common elements of the building. When our insured was in the process of selling his property, the removal of the lien was requisitioned by the buyer’s lawyer.

Coverage in Action: In order to close the transaction, Stewart Title gave an undertaking to have the lien removed from title. Thereafter, Stewart Title retained a lawyer to challenge the lien claimant. The application was successful and the construction lien was removed from title. As Stewart Title had also insured other homeowners in the building, the lawyer was retained to challenge the validity of the lien against all of the other units in the insured building.

Canada Revenue Agency Deemed Trust

A borrower was in default of an insured mortgage and our insured lender was selling the property under power of sale. Prior to the completion of the lender's power of sale proceedings, the lender received a notification from the Canada Revenue Agency (CRA) claiming a super priority lien on the property. As a result of the lien claimed by the CRA, the lender would experience a deficiency in its recovery.

The notice was with respect to arrears of source deductions for Canada Pension Plan and Employment Insurance remittances. The amount claimed was over $35,000.

Coverage in Action: The lender was able to confirm with the CRA that prior to the advance of the mortgage, $12,000 of the $35,000 was deemed to be owed by the borrower for source deductions. Upon sale of the land, the lender remitted the amount of the super priority liens to the CRA. Stewart Title reimbursed the insured lender $12,000 (the amount of their loss) as a result of the portion of the super priority lien which arose prior to the mortgage being advanced.

Open Permit and Notice of Violation

After our insured purchased a property, he decided to complete some minor renovations on the house. Upon investigation with the building department it was revealed that there was an open permit with respect to a rear addition at the property, and numerous notices of violation relating to additional work on the septic system and bathroom which had all been done by a previous owner without a permit. As a result, the municipality refused to issue a new building permit for the minor renovations that the insured wished to complete and required that the existing open permit and notices of violation be remedied.

Coverage in Action: Stewart Title covered the claim and paid more than $60,000 in rectification costs to have the open building permit closed and the notices of violations lifted.

Lack of a Final Inspection

The municipality had issued a building permit to a prior owner for the construction of an addition to the dwelling. Although the construction had been completed prior to our insureds’ purchase of the property, the final building inspection had not been performed by the local municipality. After closing, our insureds became aware of the lack of a final inspection when the municipality issued two work orders against their property.

Coverage in Action: Stewart Title retained the services of an adjuster and engineer to determine the scope of work required in order to have the property pass a final inspection. Stewart Title paid approximately $80,000 to indemnify our insureds for their losses.

Lender Missed Execution

Our insured lender issued a notice of sale when its mortgage went into default. During the mortgage enforcement process, it was discovered that the property was subject to a $1,500 execution which had been missed at the time the mortgage was registered. The proceeds of the sale by the insured lender were not sufficient to cover both the execution and the amount owing under the mortgage. As a result, due to the loss in priority of the mortgage to the execution, the lender recovered $1,500 less than it otherwise would have been able to.

Coverage in Action: Stewart Title provided coverage by reimbursing the insured lender the $1,500 paid out of the sale proceeds to the execution creditor.

Power of Attorney Forgery

Using a forged power of attorney purportedly signed by his elderly mother, a son transferred his mother’s property from her name to his name and proceeded to mortgage the property without her knowledge or consent. The elderly woman discovered the fraud when mortgage enforcement notices were mailed to her home. The lender, who was insured by Stewart Title, made a claim under its policy.

Coverage in Action: After determining that the power of attorney was a forgery, Stewart Title paid the insured lender the full amount owing on the mortgage, which amounted to over $65,000.

Intervening Registration

During the gap period shortly after closing, our insured’s lawyer advised us that he had completed a title search prior to the closing date and confirmed that as of the closing date there were no unexpected encumbrances registered on title. However, during the gap between the submission of the title documents for registration and the actual registration, a trustee in bankruptcy had registered a certificate of pending litigation on title with respect to a claim involving the previous owners of the property. As a result, the purchaser’s title was subject to this prior claim by the trustee in bankruptcy.

Coverage in Action: Stewart Title retained local counsel to defend both the insured owner and lender and was successful in having the claim by the trustee removed from title.

Missing Permit

Our insured homeowner purchased a property containing three apartment units with a septic endorsement attached to their owner policy. Subsequent to closing, problems developed with the functionality of the septic system which required investigation from the health department. This investigation revealed that there were, in fact, three separate septic systems servicing the land. Only two of the septic systems had permits and the homeowner was required to obtain a permit for the third.

Coverage in Action: Coverage was available for the septic system that lacked the required permit due to the provision in the septic endorsement that covers loss or damage in the event that a local authority search would have revealed that a use permit had not been issued for the system. A new septic system was installed for approximately $30,000.

Hidden Septic System

Our insureds purchased a rural home and a few weeks after the closing, noticed a lingering pungent odor emanating from under the addition that was built onto the back of the house. After further investigation, it was discovered that the addition was constructed above the septic system without the previous owner obtaining a permit. The town issued an order to the insureds requiring them to obtain a permit for the addition. Since the addition was constructed on top of the septic system, which is not allowed, the septic system had to also be relocated.

Coverage in Action: Stewart Title spent more than $130,000 to demolish and reconstruct the addition and install a new septic system located at an appropriate distance from the home. Stewart Title also approved and paid for alternative accommodations for our insureds during construction as it was unsafe for them to remain in the home during the remediation.

Error in Ensuring Compliance with Terms of Agreement of Purchase and Sale

When our insured purchased the land, one of the conditions in the Agreement of Purchase and Sale was for the seller to provide a receipt for pumping the septic tank that included confirmation that at the time of the pumping, the septic system was in good working order. Prior to closing, the insured’s lawyer did receive a septic pumping receipt; however, it disclosed several matters in need of repair. The lawyer missed this disclosure in the receipt and proceeded to complete the transaction without requiring the vendor to undertake the required repairs.

Coverage in Action: Based on the insured’s lawyer’s error in not corresponding with the seller’s lawyer prior to closing to ensure that the repairs were completed, coverage was provided to the insured under the Closing Protection Letter. Stewart Title paid over $1,000 to cover the cost of required repairs.

Mistaken Release of Holdback Funds

When our insureds purchased the land, the Agreement of Purchase and Sale included a condition for a holdback of $6,000 to be held in trust by their lawyer, to be released only upon completion of specified work to the property.

No amendment was made on the Statement of Adjustments to reflect the holdback and no undertaking was given by the vendor’s lawyer regarding this matter. On closing, all funds were released to the vendor’s lawyer and given to the vendor. No funds were held in trust for the holdback by the Insureds' lawyer and attempts to recover the funds from the vendor were unsuccessful.

Coverage in Action: Stewart Title paid $6,000 to the insureds to resolve this claim, based on their lawyer's error in not retaining funds for the holdback in his trust account.

Statement of Adjustment Error

When purchasing the land, our insured agreed to assume an existing tenant at a monthly rental of $6,750, pursuant to the terms of the Agreement of Purchase and Sale.

No adjustment was completed for the rental income on the Statement of Adjustments for the month of closing. After closing, the seller refused to pay the full amount for the rental adjustment owed to the insured.

Coverage in Action: Stewart paid the insured $700 to cover the shortfall of rental income provided by the seller, based on the lawyer’s error in not ensuring that the rental adjustment was included on the Statement of Adjustments.

Encroachment of House

Our insureds purchased a property which contained a house, car port and shed. Ten years later, the adjacent neighbours obtained a survey as they planned to sell their property. This survey revealed that the lands occupied by the insured were actually located on the neighbour’s property and that the only property which they had legal ownership to was an adjoining parcel of vacant land.

Coverage in Action: Coverage was provided by Stewart Title as the insured had originally obtained title to an incorrect portion of land. Stewart Title retained legal counsel to facilitate a land exchange between the insured and their neighbour, covering the associated costs.

Barn Encroachment

When our insured was selling his property, the purchaser obtained an up-to-date survey. The survey revealed a sizeable encroachment of our insured’s barn onto an adjoining property. The purchaser’s lawyer requisitioned the rectification of this issue in order for the purchase to proceed.

Coverage in Action: Stewart Title first tried to negotiate an encroachment agreement with the adjoining land owner. After that was refused, we obtained quotes for the removal of the offending portion of the barn from the adjoining neighbour’s lands, and for the reconstruction of the barn wholly within the property boundaries. Stewart Title paid $25,000 to our insured which enabled him to close the transaction by providing the purchaser with his undertaking to remove the encroachment shortly after closing.

Missing Title

After our insured had arranged financing for his property, the lender discovered that our insured did not actually have title to the property in question because the transfer had been rejected by the land registry office.

It was later discovered that the lawyer who acted on the initial transfer to the insured five years prior had never received any notification that the transfer had not been registered. Also revealed was that the titles to two adjoining properties also owned by the insured were incorrect - the wrong properties had been conveyed and re-conveyed to various owners several times without any discovery of the mix-up.

Coverage in Action: Upon receiving the claim under the owner’s policy, Stewart Title immediately retained a lawyer to complete the various transfers necessary to correct the title to each of the properties. This was completed in time for our insured to obtain the necessary financing from his lender.

Two Legal Descriptions

Stewart Title insured the purchase and mortgage of a property. When the property was to be sold, it was discovered that the property was actually made up of two different legal descriptions; one for the leasehold interest and one for the freehold interest. Inadvertently, the transfer and mortgage were only ever registered against the leasehold interest even though our insured owners intended to purchase both the freehold and leasehold interest and the lender intended to mortgage those same interests. The property could not be sold until title was corrected so that the insured owners would own both interests, and that the insured mortgage would be registered against both titles. A claim inquiry was made under the owner’s policy.

Coverage in Action: Stewart Title hired counsel to attend court and correct the title by obtaining title to the freehold interest, thereby allowing the sale of the property to close in a timely manner.

Missing Good Root of Title

When our insured was selling his property, the purchaser’s solicitor refused to complete the transaction on the basis of there not being a good root of title.

Coverage in Action: Stewart Title gave an undertaking and indemnity to the purchaser which allowed the transaction to close in a timely manner. Immediately following the closing, Stewart Title retained a local solicitor to research the complicated title situation and to bring the necessary applications in order to establish a good root of title.

Condo Unit – Missing Titles

Four years after the purchase of their residential condominium unit, our insureds received a letter from the municipality indicating that in addition to the title of their condominium unit, they were to also have received title to the parking and locker units which they had occupied since closing. A title search revealed that the parking and locker units were mistakenly still registered to the prior owner, originally intended to be conveyed to our insureds with the dwelling unit.

Coverage in Action: Stewart Title retained counsel and paid to have title to the parking and locker units transferred to our insureds.

Missing Permits and Zoning Violation

Our insured purchased a house and then subsequently received notice of an order from the municipality to remove three large additions that had been added to the home by the prior owner without the required permits. The order required that our insured either remove the additions or obtain permits for the construction. Unfortunately, to comply with the order, two of the additions required major structural work and the third addition was in violation of a local zoning by-law and would require a minor variance from the by-law to remain in its current location.

Coverage in Action: Stewart Title paid approximately $110,000 to have the permits obtained and approved. Stewart Title also obtained a minor variance to the zoning by-law, allowing the third addition to remain in place.