Mistakes happen. We’re here to help.
TitlePLUS Legal Service Coverage, included in most policies at no extra charge, explicitly covers losses resulting from a lawyer’s negligence in providing legal services for the transaction. This also means that a buyer or lender protected by a TitlePLUS policy would not need to sue their lawyer to obtain compensation for a loss suffered in relation to the transaction where the loss was caused by the lawyer’s negligence at law.
TitlePLUS polices automatically cover all the standard aspects of a real estate deal plus the legal services provided by the lawyer in the transaction regardless of whether the loss falls under one of the covered title and compliance risks.
Imagine this scenario:
After looking at a variety of condominium units in a new condo complex, your client is very excited about the lakeview unit they’re purchasing. The unit is described in the purchase agreement as apartment 532 and as unit 2, level 5. However, the legal description was incorrect – unit 2, level 5 was in fact apartment 530 – which did not have a view of the lake. The real estate agent and your client did not know this. You obtained a status certificate for unit 2, level 5. On closing, the client took title to a unit which they had no intention of purchasing, and the unit they actually wanted was sold to another party.
How TitlePLUS Legal Service Coverage helps: the buyer was compensated for the difference in value between a unit with a view of the lake and one without a view of the lake.
Here’s another example:
The buyer of a condominium unit told their lawyer that they preferred to pay cash for the unit rather than incur the interest charges associated with a vendor take-back mortgage. Although the purchase agreement provided for this option, the buyer’s lawyer did not follow through on these instructions. The buyer gave a vendor take-back mortgage on closing, even though other buyers in the same complex paid cash for their units.
How TitlePLUS Legal Service Coverage helps: the buyer was compensated for approximately $9,000 of interest they paid.
Other issues that may fall under TitlePLUS Legal Service Coverage:
- errors in drafting and/or reviewing the agreement of purchase and sale
- failing to disclose information to the lender client that is material to the decision to advance funds under the mortgage
- an error made in the application for title insurance, such as applying for the wrong type of title insurance policy (which may result in insufficient coverage for the client)
- failing to ensure that a purchaser’s intended future use of the property is protected (where the lawyer was retained to confirm the legality of a proposed future use)
- obtaining title insurance for a single family dwelling when the property features multiple units
- incorrectly advising (or failing to advise) about taxes applicable to the transaction or tax consequences
- inadequately drafting undertakings, warranties or other documents in connection with the transaction
So, why is TitlePLUS Legal Service Coverage beneficial to clients when a lawyer has E&O insurance? A lawyer’s E&O policy protects the lawyer from liability for their clients’ losses suffered because of the lawyer’s negligent error or omission. It does not directly protect the client and the client does not have the right to make a claim directly against the lawyer’s E&O policy.
For a client to benefit from a lawyer’s E&O insurance, they may need to:
- sue the lawyer
- pursue the litigation to trial
- prove that they suffered a loss
- prove that the loss was caused by the lawyer’s error or omission
- prove that the error or omission was the result of negligence, and
obtain a judgment against their lawyer
Even with a judgment in hand, there may be further problems and complications for the client hoping to benefit from their lawyer’s E&O insurance (depending on the insurer):
- the lawyer may have breached a term of the E&O policy and coverage is not available; or
- the lawyer normally would have coverage under the E&O policy, but the lawyer’s available policy limits will not satisfy the judgement (e.g., other claims have already been paid out during the policy period that have reduced or exhausted the policy limits, or the lawyer has had a change in status and now carries a lower sublimit of coverage, or the judgment is simply too high for the E&O policy limits).
With a TitlePLUS policy, a client simply submits a claim directly to TitlePLUS. This means, the lawyer’s primary E&O policy will not be engaged and will not trigger a deductible or claims history levy surcharge in respect of the claim.
TitlePLUS Legal Service Coverage is part of the policy: It protects you and your purchaser client for as long as the property is owned by them, their spouse, children or heirs. A lender policy continues to protect the insured lender provided the insured mortgage constitutes a charge on the property, even if the mortgage is renewed, extended, amended or assigned.
It’s a win-win!
Please refer to the policy for full details, including actual terms and conditions. TitlePLUS Legal Service Coverage is not available for Existing Owner and Québec policies, or for lender policies where the lawyer ordering the policy acts for the borrower only.