You just bought a new house.
When you bought it, you likely purchased title insurance. Most do, these days.
Title insurance policies in Ontario are extensively used for home buying, but the law has not kept pace on these types of policies, what they mean, what they actually cover, and the like. There is a gap.
Title insurance remains somewhat of a mysterious insurance policy in Ontario, including for many lawyers. There simply have not been enough cases about the scope and true coverage of title insurance policies to understand them fully and properly. Of course, this presents risk to both new home buyers and the lawyers who represent them.
Enter the Ontario Court of Appeal recently.
Title insurers typically narrowly interpret their policies when it comes to the scope of coverage available. Often the scope of coverage relates to “marketable title”. Generally, title insurers tend to limit their scope of coverage position to cases where the homeowner is forced by a government authority to remove or remedy a structural defect, pursuant to section 8 of the Ontario Building Code Act, which specifically addresses permitting requirements, as distinct from a sub-section 15(4) order against the homeowner, which addresses a building that is determined to be unsafe. Title insurers often take this position, but now they will not be able to do so.
The case: MacDonald v. Chicago Title Insurance Company of Canada (Ontario Court of Appeal, 2015).
The homeowner was issued an order by the municipality to remedy an unsafe building, created because a former owner of the property had illegally removed a supporting wall.
The homeowner’s title insurer denied the claim.
Eventually the case made its way to the Court of Appeal, who disagreed with the lower Court and ordered that the title insurance was liable for the cost to remedy the unsafe defect in the home. The homeowners were also awarded costs for their appeal and the lower Court process.
Effectively, this means that if is illegal work done in your home by a former owner that did not comply with the building code at the time, your title insurer (assuming you purchased title insurance when you bought the property), should be covering the cost of a post-closing work order issued by the municipality.
Good to know.
This WARDSPC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.
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