Chicago Title is introducing important clarifications to the language in their Title Insurance policies.

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Chicago Title is introducing important clarifications
to the language in their Title Insurance policies.

Our team takes pride in developing policy wording that is clear and simple, so the legal community and their clients can easily understand the protection that is provided. With that in mind we have made some important clarifications to the language contained in Chicago Title’s policy jackets.

These changes become necessary further to the judgement from the Ontario Court of Appeal in the MacDonald case where the Court reversed the judgement of the Ontario Superior Court of Justice which had accepted Chicago Title’s position that the No Permit Coverage was inapplicable because the MacDonalds were not being forced to remove their existing structure due to the lack of a building permit. Similarly, the Judge held that the Unmarketability Coverage did not apply because the MacDonalds ownership interest in the property was not affected by the unpermitted construction undertaken by the prior owner and the home remained marketable.

The Ontario Superior Court found that the title insurer was not liable under the title insurance policy for what was, for all intents and purposes, a latent physical defect.

The Court of Appeal opted for a more expansive view of what constitutes marketability of Title. It is important to not confuse marketability of Title with the market value of the Land. Defects in the physical condition of the Land or its use are not matters that fall within the marketability of Title provision contained in the title insurance policy. Title insurers do not cover structural, architectural, engineering or environmental defects or conditions. To do so, title insurance policies would need to be exponentially more expensive.

A number of articles have been written by eminent lawyers and most agree to say that the interpretation of marketability of Title by the Court of Appeal extends its definition to the marketability of the Land or the value of the Land  and  incorporate  defects  that  have  nothing  to  do  with Title.

The changes to the language do not amend the coverage offered by Chicago Title they are meant to clarify the extent of the coverage and are a reflection of the conventional understanding of the coverage offered by the title insurance policies issued and underwritten by Chicago Title.

  • The statement of coverage has been amended in the residential owner policy to specify that the risks are covered by this policy if they affect the Title or the Land, as both these terms are now defined in the Policy.
  • A definition of «Unmarketability of the Title» has been added to the residential owner policy.
    • The introduction of this definition eliminates any confusion between marketability of the Land (Covered Risk 12) vs marketability of the Title (Covered Risk 11).
  • The term «Title» and the term «Land» are now both defined as:
    • The term «Title» is defined by the interest in the Land, not taking into consideration any improvements or structures that might be located on the
    • In light of this definition now being contained in the policy, Covered Risk 11 of the residential owner policy has been amended to read: <<Unmarketability of the Title>> which allows another person to refuse to perform a contract to purchase, to lease or to make a mortgage loan.
  • The definition of «Title» has also been added to the residential loan policy and the term has been capitalized as used in the loan policy.

If you have any questions or require additional clarification on the above changes please contact one of our client service representatives directly at info@chicagotitle.ca or 1-888-868-4853.