Exceptions
With respect to the policy, a specific exception will be added to the owner policy in these cases, due to the greater risk of work being done without a permit and the possibility of outstanding final meter reading charges. The underwriting that will go into Schedule B of the owner's policy will state:

For Owners:

"Covered Title Risk 20(f) is expressly deleted from coverage. The Company assumes no liability for any matters falling within Covered Title Risk 20(f) of this Policy. There is also no coverage for loss or damage sustained as a result of any outstanding amounts owing resulting from final hydro meter reading charges."

For Lenders:

For lenders, there are no exceptions for permit issues unless a specific problem is found while conducting the required searches noted above. There are no exceptions for final meter readings.

If the property is currently being used as a grow-op, a policy cannot be issued. Further, if the searches noted above are not conducted, additional exceptions must be added to Schedule B of the owner policy for any matters that would have been revealed by those searches.

Court Orders
In some circumstances we have seen registered on title court orders indicating that the property has been forfeited to the Crown and, as such, a conveyance or mortgage of the property may not be valid. If it is discovered while reviewing your title search that there are unusual work orders or court orders, please contact Stewart Title prior to closing for an underwriting decision.

A Stewart Title underwriter can be of assistance any time you are acting on a former grow-op transaction.

Over the past several years Stewart Title has actively implemented various procedures and protocols to identify transactions that pose a greater risk due to possible title fraud, including fraud mitigation questions.

On each transaction you insure with Stewart Title, you are asked the fraud mitigation question of whether or not there has been a transfer or mortgage discharge registered within the past six months.

When insuring a mortgage where there will be a transfer for nominal consideration occurring immediately before the mortgage is registered, please answer "yes" when asked this fraud mitigation question.

Regardless of whether you are or another lawyer is registering the transfer, there will have been a transfer registered within six months of the registration of that mortgage, therefore triggering an underwriting review flag.

It is our goal is to identify situations where additional risk may be present, and appreciate your cooperation in helping to detect possible fraudulent transactions and thus, protecting the interests of your clients.

Search Requirements
Our residential search requirements state that there is no requirement for an execution search to be conducted against prior owners in the chain of title.

An execution search against the current owner(s); however, must be conducted within 10 business days of the transaction's closing date. If the mortgage is insured by Stewart as well, an execution search should be conducted against the borrower(s) also.

If your search reveals similar or same name executions please ensure that the guidelines below are followed. Where an execution is against the current owner or borrower, it must be paid out prior to or on the closing date and appropriate arrangements made to have the execution lifted. If this is not possible, you must contact a Stewart Title underwriter prior to closing.

Similar/Same Name Executions with a principal amount less than $50,000
If an affidavit sworn by the vendor or borrower (if applicable) has been obtained and indicates that he/she is not one and the same as the judgment debtor in the execution, there is no requirement to contact Stewart Title.

Similar/Same Name Executions with a principal amount $50,000 or over
As indicated above, the individual vendor or borrower may swear an affidavit if the principal amount of the execution is less than $50,000. If the principal amount is $50,000 or more, a solicitor's affidavit or a written confirmation from the judgment creditor is required, confirming that the vendor or borrower (if applicable) is not one and the same as the judgment debtor in the execution.

The solicitor's affidavit must be based on independent evidence that the vendor/borrower is not one and the same as the judgment debtor (it is insufficient to simply ask the vendor or borrower in this regard).

We are occasionally asked by solicitors acting on transactions for a purchaser if we will accept a statement of law made by the vendor's solicitor on the transfer/deed to the purchaser, in lieu of the solicitor forwarding their affidavit confirming that their client is not one and the same as the judgment debtor. This is acceptable if the appropriate statement of law has been made within the transfer/deed to the purchaser, and the purchaser's solicitor confirms with the vendor's solicitor that the same has retained an original of their affidavit indicating that the vendor is not one and the same as the judgment debtor listed in the execution.

Where the appropriate affidavits are obtained and correct statements of law are made, the similar/same name executions do not need to be listed on Schedule B as exceptions. Be sure to answer all questions regarding executions in our various software applications.

Parcel Register noted as being "Subject to an Execution"
In some instances, when the property is converted from Registry into Land Titles, the thumbnail portion of the legal description is made "subject to executions, if enforceable." If the parcel register has this notation and a solicitor advises that said reference will be deleted from the parcel register prior to closing, then no underwriting is required.

If a solicitor advises that they can confirm that said execution is no longer enforceable (i.e. it is not in the database for e-reg jurisdictions) and deletion of this reference will take place after closing, then custom underwriting may be provided upon review by an underwriter. A Stewart Title underwriter should be contacted prior to the completion of the transaction for further guidance.

If Search Requirements Cannot be Met or If Execution is Against the Vendor or Borrower

Where a solicitor is unable to satisfy any of the above-noted execution affidavit requirements, an exception must be entered on Schedule B of the both the Owner's and Lender's Policy and no coverage is provided for the execution(s). Additionally, executions against the actual person are not covered and must be listed as an exception on Schedule B if they will not be paid out and lifted on or before closing.

Lender coverage may be considered in the following circumstances:

The likelihood of the execution creditor, or a successor or assign exercising its rights to enforce the judgment is minimal.

Please contact our underwriting department well in advance of closing.

Seller Property Information Statements ("SPIS")

The article regarding Seller Property Information Statements (SPIS) has been removed from our web site. The October issue of Stewart Title's newsletter will contain a new article with further clarification on SPIS. In the meantime, should you have any questions regarding SPIS, please contact our underwriting department at 1-888-667-5151.

Below are some claims stories from our recent files:

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.

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

Missed Execution
The insured lender advanced a private third mortgage to a borrower. At the time of closing, the lawyer who acted for the insured lender inadvertently conducted an execution search in the wrong municipality, receiving a clear execution certificate against the borrower. Subsequently, when the insured lender commenced power of sale proceedings against the borrower, it was discovered that an execution against the borrower existed in priority to the registered mortgage.

Resolution: Stewart Title paid over $28,000, (the financial loss suffered by the insured lender as a result of the execution), which took priority over the insured lender's third mortgage.

Undischarged Line of Credit
Several months after the purchase of our insured homeowner's property was completed, it was discovered that the vendors' line of credit (registered on title as a mortgage) had not been discharged from title. After further review, it was found that although the required funds to pay out and close the existing line of credit had been forwarded to the financial institution, the bank had inadvertently failed to deactivate and discharge the vendors' line of credit. Upon discovering that they could still access the line of credit, the vendors proceeded to withdraw funds and run up the balance of the line of credit after the property had already been transferred to the insureds.

Resolution: Stewart Title retained a lawyer to review the matter. Following negotiations, the bank accepted responsibility for the error and the line of credit was discharged from title.

We are excited to announce Stewart Title's continued support of the Canadian Bar Association at this year's Canadian Legal Conference taking place from August 16 to 18 in Dublin, Ireland.

Our Sponsored Events Include:

Riverdance
Gaiety Theatre
Sunday, August 16, 2009

Young Lawyers Late Night Bash
Kobra Bar
Sunday, August 16, 2009

Our sponsorship commitment with the CBA builds on our history of supporting legal professionals through initiatives such as the development of programs and innovative information technologies. The Canadian Bar Association provides a range of tangible and intangible benefits to its 37,000 members and to the legal community at large; it is a leading provider of continuing legal education programs; and is a dominant voice in promoting the rule of law in Canada and around the world.

Working together, we continue to achieve our common goals in providing support to the legal community.

Stewart Title's Canadian operations were recently profiled in an issue of Exec Digital Canada. Click here to view the article in its entirety.