Canada: Title Insurance And Land Surveys

Typically, it is the practice of American mortgage lenders to require that the borrower provide both title insurance and an ALTA survey. Generally, title insurance is available across Canada, and the government survey standards, at least in Ontario, are equal to or exceed the ALTA survey standards.

Title insurance has been available in Canada since at least the 1960s, but until recently it was used chiefly to satisfy U.S. clients who insisted on title insurance in large commercial transactions, or to expedite closing of complicated transactions with title problems. In the last five years, title insurance has become more mainstream, and this increase in use is primarily attributable to extensive marketing by large U.S. title insurers extending their businesses to Canada and to U.S.-based financial institutions requiring title insurance for all mortgages included in their Canadian commercial mortgage backed securities products. Recently, lenders based in Canada have embraced title insurance, particularly for residential transactions. Though title insurance is still a long way from replacing solicitors’ title opinions in purely domestic, single-property transactions, the trend is clearly moving toward routine use of title insurance in many types of transactions. As transactions continue to become more national and international in nature, standarized title insurance provides comfort to institutional lenders and risk managers and facilitates closings, in part by reducing the need for reliance on opinion practices particular to individual jurisdictions.

Currently, there are four title insurers issuing commercial title policies in Ontario, namely, Chicago Title Insurance Company; First American Title Insurance Company (represented by First Canadian Title Company); Lawyers’ Title Insurance Corporation (represented by LandCanada); and Stewart Title Guaranty Company.

The U.S. American Land Title Association ("ALTA") has developed standard title policies. There is no equivalent standardization in Canada, with each title insurer using its own form of policies, which are somewhat different from each other, but which are modelled on the U.S. 1992 ALTA forms. As a comfort to U.S. clients, some, if not all, of the title insurers operating in Canada will give an endorsement to the effect that any loss that would have been insured under the company’s ALTA 1992 form of policy will be covered.

With respect to title insurance, Canada is an "unregulated jurisdiction" (for example, there are no government set premium levels). Accordingly, there is broad flexibility in the available endorsements (as many as 50 different endorsements have been identified) and some ability to negotiate the policy fee, particularly for large transactions and high volume programs. Generally, there has been no additional charge for endorsements, although premiums are now being sought by at least some of the title insurers for certain endorsements, such as zoning and creditor’s rights endorsements. Additionally, title insurers are amenable to developing programs tailored to the needs of clients with a large volume of transactions, including setting standard endorsements and volume discount fees.

In Ontario, title insurers must be licensed under the Insurance Act (Ontario). Regulation 666 under that Act prohibits a title insurer from issuing a title policy without first obtaining a certificate of title to the property issued by a lawyer who is not at that time in the employ of the insurer. Accordingly, the purchaser’s or mortgagor’s counsel is often requested to provide a title opinion to the title insurer in satisfaction of the certificate of title requirement. Typically, the title insurer’s opinion requirements are less stringent than what is required in a customary title opinion.

ALTA/ACSM is the name given to survey standards developed by the American Land Title Association (ALTA) and American Congress on Surveying & Mapping (ACSM), and accepted by the U.S. title insurers. These standards must be satisfied for a survey to be known as an ALTA survey. Upon receipt of an ALTA survey, title insurers insure title free and clear of survey matters, except those matters disclosed on the survey and indicated on the plat or map.

The ALTA standards do not apply in Canada. However, in Ontario, surveys must comply with the Registry Act (Ontario) and the Surveyors Act (Ontario) and the regulations thereunder, and these standards are equal to or exceed the ALTA survey standards.

Many U.S. lenders require zoning compliance confirmation, including height confirmation or parking compliance confirmation. These confirmations are typically not available from a surveyor in Ontario but would be provided by a lawyer or zoning consultant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.