Title Insurance Gaining a Foothold in B.C.

Title insurance has become much more relevant in British Columbia (“BC”) in recent years. Prior to that, it was customary for lenders and property owners in BC to rely on the protections afforded by the Torrens land title system in BC, which is widely viewed as one of the best systems in North America for the guarantee of title and priority based on the land title register.

Lending transactions have become more complex in recent years, often involving syndicate lenders based in Eastern Canada or the United States. It has become common practice for the lead agents of these syndicated loans to require the borrowers to purchase lender title insurance policies.

In addition, title insurance companies have, in recent years, expanded their coverage with a view to being more relevant to property owners. This has helped them with their marketing efforts in BC. Some examples of relevant coverage for property owners are as follows:

  • Canada Revenue Agency (“CRA”) super lien coverage – This coverage protects against a CRA lien filed against the property for unpaid taxes of a vendor (including unpaid GST remittances);
  • Undersurface rights coverage – Undersurface rights are common in British Columbia (particularly for mining and oil and gas exploration). This coverage protects against losses resulting from the exercise of any such undersurface rights;
  • Government response coverage – This coverage protects against errors in any governmental or quasi-governmental off-title or lien search reponses (excluding environmental issues);
  • Work order coverage – This coverage protects against outstanding work orders from governmental or quasi-governmental entities (excluding environmental work orders) and for lack of a building permit or occupancy permit;
  • Compliance with registered encumbrances – This coverage protects against losses or damages resulting from breaches or violations of registered or other disclosed encumbrances;
  • Survey – This coverage protects against encroachments onto and from adjacent properties. There are special endorsements available for known encroachments; and
  • Lease enforceability – This coverage protects against unenforceability of a lease.

An important attribute of title insurance policies is the insurer’s duty to defend. This means that the insurer will pay the costs, legal fees and expenses incurred in defending the insured’s interest in the property (including the priority and enforceability of an insured mortgage). Amounts paid under the duty to defend are in addition to the stated amount of insurance coverage in the policy.

Please contact us if you are interested in learning more about title insurance options for your property.