Tag: fraud

Not all Title Insurance Policies are Created Equally: lender’s title policy vs. owner’s title policy

Posted on by

You are buying your first home and you have signed so many documents your hand is getting sore. You likely have signed a mortgage, the mortgage covenants, discussed title to the property with your lawyer, arranged for fire insurance; maybe you talked about zoning requirements (depending on your plans for the property); arranged for your down payment on the home; Not to mention that you have been dealing with the logistics of moving—renting a van, picking up pizza and soft drinks to lure your friends in to helping you out; You have been so busy that you probably do not even remember the (likely very brief) conversation you had with your lawyer about title insurance. There can be serious consequences of not being aware of the difference between a Lender’s vs. and Owner’s title insurance policies. What is more concerning is the differences are not easily identified by title insurance companies and require a thorough reading by the counsel and the policy holder.

Here are some basic differences between the two types of title insurance policies:

1. Lender’s policy

A lender’s title insurance policy is usually required by your mortgage company when you purchase a home if you do not have a building location survey. Whereas a survey can  be thousands of dollars, a typical title insurance policy usually costs between $1-200 per policy. This makes title insurance an alluring option for home purchasers rather than spending thousands of dollars when you have already made the (likely) single biggest investment of your lifetime!

Here are some key facts about the lender’s policy:

  • Also known as “loan” policy
  • Lender requires lender’s policy before financing purchase;
  • Only covers the lender’s interests in the property;
  • Types of risks covered:
    • Fraud (signing wrong name on mortgage, etc.);
    • Legal fees in defence of title (ownership issues);
    • Issues regarding priority (other mortgages or judgements registered ahead of bank’s mortgage);
    • Gap coverage (if mortgage not registered on title for a period of time after closing);

2. Owner’s Policy

An owner’s title insurance policy can provide protection against the losses listed in the policy. Some examples could be:

  • someone else owns an interest in your title
  • existing liens against the title
  • violations of municipal zoning by-laws
  • encroachments onto an adjoining property (other than fences and boundary walls)
  • setback violations
  • realty tax arrears
  • outstanding municipal utility charges, provided such charges form a lien on title
  • existing work orders
  • lack of legal access to the property
  • unmarketability of the land due to adverse matters that would have been revealed by an up-to-date survey / RPR/ Building Location Certificate

3. Some helpful links

If the difference between the two types of title insurance policies is still not clear, here are some links that may assist you in further understanding the differences:

 

 

 

Share the post "Not all Title Insurance Policies are Created Equally: lender’s title policy vs. owner’s title policy"

  • Facebook
  • Twitter

Theft by Enduring Power of Attorney for Financial Affairs

Posted on by

(why you should choose your Power of Attorney wisely)

Rise in Power of Attorney Theft

There has been a rise in the financial abuse of the elderly in recent years. Here are some recent articles from the Toronto Star and McLean’s. In mid-September, 2014, a Belleville, Ontario woman who held a power of attorney for property was charged for misappropriating $10,000 from her elderly parents. Here is an article from Niagra this week regarding this story.

Not only is misuse of a power of attorney a breach of the attorney’s duties to the donor, but it is illegal under section 331 of the Criminal Code of Canada., which states as follows:

Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted the power of attorney.

Regardless of these laws, police have noted that power of attorney theft is underreported. (see “Power of attorney theft underreported, police say”,  CBC news , text available here . There are many reasons why this is likely the case:

  • For the most part, people holding a power of attorney are unsupervised.
  • A donnee of a power of attorney is likely acting when the donor is mentally incompetent. This creates an inherent potential for mismanagement and abuse (see Ann Soden, Advising the Older Client, Markham: LexisNexis Canada, 2005) at 112 & 113.
  • Power of attorney theft is complicated and difficult to explain to authorities (more difficult to prove than straightforward theft).

Protection from Misuse of a Power of Attorney

How can people protect themselves from misuse of a power of attorney for financial affairs? Here are some general suggestions:

  1. The grantor of the attorney should pay close attention to the donnee’s personal characteristics. According to Ontario estate lawyers, Kimberly Whaley, Amy Cull and Ian Hull, the most important characteristics are honesty, integrity and accountability. (“Financial Abuse, Neglect and the Power of Attorney” (paper delivered at the Canadian Conference on Elder Law / World Study Group on Elder Law 2010, October 28, 2010),online: Whaley Estate Litigation <http://whaleyestatelitigation.com/blog/2010/10/financial-abuse-neglect-and-the-power-of-attorney/  >.
  2. It is important to have conversations with your attorney while you are healthy about your financial wishes and the decisions you would normally make regarding your financial affairs.
  3. The donor may wish to choose a power of attorney that has not previously filed for bankruptcy or is not currently an undischarged bankrupt. In some jurisdictions, an undischarged bankrupt is disqualified from acting as a power of attorney (Manitoba, Saskatchewan). If someone has shown struggles with financial management, this may be a red flag that the individual is more likely than others to run into difficulties while using a power of attorney.
  4. It may be helpful for the donor of a power of attorney to express his/her wishes to other family members, who may act as a “check and balance” for the attorney.

 Conclusions

A donee of a power of attorney has a duty to carry out your wishes according to your instructions. If you have not given instructions, then the donee must act reasonably and in your best interests. The donee has a duty of utmost good faith (fiduciary duty) to act in your benefit. Therefore, appointing an attorney is a decision not to be taken lightly. After all, a donee of a power of attorney becomes your “agent” and goes out into the world and makes decisions for you.

Should you have any specific questions regarding your situation or for legal advice, contact us.

Share the post "Theft by Enduring Power of Attorney for Financial Affairs"

  • Facebook
  • Twitter