What were they thinking?
That was my first reaction
when the Title Insurance
Industry Association of Canada
(TIIAC) lobbied the Ontario
government to repeal Regulation 69/07 (formerly Regulation 666) under the Insurance
Act.
It is hard to believe that
there could have been a marketing decision made to rank
with the ill-fated attempt by
Coca Cola Co. to replace the
hugely popular taste of “
Original Coke” with that of a “New
Coke.” However, this may be it
and in fact TIIAC’s reversal of
its position was even more
abrupt than that of Coca-Cola’s.
Regulation 69/07 requires
title insurers in the province of
Ontario to use a lawyer not in
their employ to certify title
before they issue a title insurance policy in every case. The
regulation has been viewed as a
key piece of consumer protection legislation because the
purchase of a residence is one
of the largest financial transactions that a person will make
in a lifetime. The regulation
ensures that members of the
public will have independent
legal advice available to them
each time a purchase of this
nature is made.
Since the mid-1990s, when
U.S.-based title insurers first
entered the Ontario market,
there has been a certain tension
between those title insurers and
real estate lawyers. At least one
of those title insurers attempted
to repeal what was then Regulation 666 and set up direct closing centres for residential transactions. Many in the industry
felt this evidenced an intention
by the title insurers to take over
the role of lawyers in real estate
transactions, with the potential
for a resulting loss of protection
for the public.
Those attempts failed in the
face of significant opposition
both from lawyers’ groups and
other stakeholders, and in
recent years the tension level
between the parties appears to
have quieted down. In fact, it
seemed to me title insurers had
become more supportive of the
independent lawyer’s role in
real estate transactions and
made attempts to publicize
what they stated as their
“change of attitude” on this
issue.
So is was surprising to me
that, last October, TIIAC wrote
to the Minister of Finance and
proposed, among other submissions, that as part of the new
minister’s review of the
Insurance Act, Regulation 69/07 be
repealed or amended so that
the requirement to use an
independent lawyer when issu-
STEVEN
PEARLSTEIN
It is hard to believe
that there could have
been a marketing
decision made to
rank with the ill-fated
attempt by Coca Cola
Co. to replace the
hugely popular taste
of ‘Original Coke’
with that of a ‘New
Coke.’ However, this
may be it.
“
FRANCO DERIU / DREAMSTIME.COM
Steven Pearlstein,
Minden Gross LLP
ing title insurance policies be
discontinued.
TIIAC pointed out that this
regulation was unique to
Ontario and not a requirement
in regard to issuing title insurance policies anywhere else in
Canada. However, TIIAC’s submission to the minister specifically referenced “the conflict of
interest of the Law Society of
Upper Canada as a regulator
and operator of title insurance
and their ability to audit and
investigate lawyers hired by
title insurers to comply with
this regulation” and expressly
advised the minister that “at a
minimum, we are seeking the
ability to use our own in-house
lawyers.” Presumably, although
not expressly stated, this
implied that the title insurers
would no longer be using an
independent lawyer to certify
title when issuing title insurance policies.
Not all title insurers in
Ontario are members of TIIAC.
As far as I am aware, the three
principal members are FCT
Title Company Limited (“First
Canadian”), Chicago Title Insurance Company and St. Paul
Guarantee Insurance Company.
The other two title insurers in
the province are not members of
TIIAC — TitlePlus/LawPro was
denied membership and Stewart Title Guaranty Company
(“Stewart Title”) refused to join
TIIAC because its model of full
participation of independent
lawyers in conveyancing transactions was not consistent with
TIAAC’s principles.
On Dec. 7, 2011, Stewart
Title issued a letter to all of its
clients confirming that they
opposed TIIAC’s request to
change Regulation 69/07 and
confirming their support for
the role of the legal profession
in real estate transactions.
Stewart Title’s letter resulted in
a virtual torrent of letters and
emails from lawyers, title insur-
ers, LawPro and other stake-
holders.
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Steven Pearlstein is a partner
at Minden Gross LLP in
Toronto and a Certified Specialist in Real Estate Law.
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