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"Where do we get title insurance?"

"Where do we get title insurance?"

"Several of our REALTORS have asked about recent reporting in the Vancouver Sun that owners titles are at risk to fraud artists. The original article appeared in the June 20th Vancouver Sun with a follow up on June 26th. Many of you have asked where you should direct your clients to get title insurance. Before you direct your clients to title insurance you need to understand the current system."

In British Columbia our title is protected through the Land Title Act which is administered through the Land Title and Survey Authority (LTSA). Any innocent owner who loses their property through fraudsters will have their property title restored to them or will be compensated from an assurance fund of the LTSA. There is a very good website for the LTSA at www.ltsa.ca and there is a series of Frequently Asked Questions that has recently been posted by them at http://www.ltsa.ca/data/img/publication/Common-Questions-About-Title-Security.pdf. I have attached that posting to this message.

In the case of the Richmond homeowner who recently reported that he was defrauded of his house title, he should receive the title of his home back as the people who stole the title did not re-sell the property, but instead took out a mortgage then defaulted. The LTSA will restore the original title and will deal with the mortgage company to resolve that debt. If the fraudster had stolen the title and then resold the property to an unsuspecting third party, that transfer would have been to an innocent third party and it would therefore be indefeasible. The original owner would then receive compensation for full fair market value from the assurance fund and the new owner would keep their title. It is very unlikely that such a transaction could happen unless the property were vacant for a long time. Consider a prospective buyer and REALTOR showing up to the door of the home to find someone living in it (either the true owner or a tenant). They would immediately learn that the so-called seller was not legitimate.  

So what of title insurance? In this case, title insurance would offer no greater protection than what LTSA does. The title insurance company would not be able to restore the title to the original owner if the property had subsequently been transferred to an innocent third party. They may be asked to repay the mortgage to the mortgagee but would also look at the lawyer or notary to see what documentation and identification had been taken. Should your clients still wish further information, you may want to direct them to First Canadian Title.

One method that an owner can use to block any attempt to transfer their title is to obtain a “Duplicate Certificate of Title” from the LTSA. However this is not possible if there is a mortgage on the property as the mortgage company will not permit this to be taken out. If the title is clear of financial charges the duplicate can be taken however it should be kept in a safe place such as a safe deposit box or other safe place. If the duplicate is lost, it is extremely expensive and difficult to deal with. Your clients should seek legal advice prior to taking such action.

The Following was posted to the LTSA website on June 26, 2008:

Owners Can Take Simple Steps for Additional Peace of Mind with Land Title Documents

Victoria, BC -- The Land Title and Survey Authority of British Columbia (LTSA) reinforced today the safety and security of the province's land title system which has been in place since 1870. Over the past 18 years, the land title system processed 15 million transactions. During this time, two claims related to land ownership fraud were successfully resolved and only 14 claims related to mortgage fraud had been filed.

The Assurance Fund is an essential component of the land title system in British Columbia and is available to compensate registered owners of title in the event of loss. Protection of title is provided to both the seller and purchaser of property, and is critically important for economic stability, investment and social stability.

As with any area of commerce, there may be people who want to misrepresent ownership of an item, such as land. Identity theft is a concern these days and the LTSA encourages lawyers and notaries to continue to be vigilant and always ask for identification when dealing with any individual with regard to land title to ensure that they are dealing with the true owner of the land.

There are 1.8 million active titles in BC and only a handful have been the subject of an assurance fund claim related to fraud. However, if a property owner feels that their land holdings are at risk, there are simple steps that may be taken to provide additional protection.
These include:

  • An owner, via a lawyer or notary, may use the Activity Advisory Service provided by BC Online. This service provides an email notice to the lawyer or notary when an application is made that may affect the owner's title.
  • Alternatively, an owner can apply for a Duplicate Certificate of Title through the Land Title and Survey Authority, if the land title does not have a mortgage or agreement for sale registered against it. 
  • An owner who takes possession of their Duplicate Certificate of Title, should ensure it is kept in a safe and secure location to avoid the time and cost associated with replacing it.

Land title is legally protected in British Columbia under the Land Title Act. The Land Title and Survey Authority is responsible for managing the land title system in a manner that protects and maintains the security of land ownership records and documents.

British Columbia's land title system includes numerous checks and balances to identify and prevent fraud. In British Columbia, most land title and related lending transactions are conducted through professionals such as notaries and lawyers, who require proof of identity as part of their professional due diligence requirements. When land title documents are registered through the LTSA, land ownership is again confirmed against existing land title records. Documents submitted to the Authority require certification by a recognized professional.

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