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Lawyers considering the purchase of title insurance should be aware of the terms of the policies being sold in Alberta, and should not simply rely upon the statements made on a title insurer’s website or assume that title insurance provides them with no-fault coverage.
This issue has arisen because First Canadian Title (FCT), a company selling title insurance, is currently pursuing a subrogated claim against an insured Alberta lawyer who purchased a policy from FCT in relation to a problem on a real estate refinance file.
In response to this action taken by FCT, the Alberta Lawyers Insurance Association (ALIA) reviewed FCT’s website and contacted FCT. On its website, FCT makes the following statements:
Protecting your clients and law practice
Clients depend on your legal advice and services for the successful closing of their real estate transactions. Reliability and efficiency are key. So is protection – for your clients and for yourself. Title insurance and innovative workflow solutions from FCT simplify and speed the process of closing real estate deals, and enhance and safeguard your law practice.
Making a claim
We’re here to help you resolve your clients’ issues as efficiently as possible. All FCT title insurance policies include a no-fault claims process.
Residential Title Insurance
Residential title insurance is a simple way to mitigate your risk and protect your clients against losses associated with title fraud, as well as survey and title defects/issues.
Unlike traditional insurance policies, our residential title insurance does not just cover things that may happen in the future (e.g. title fraud), but also things that have already occurred in the past, prior to transaction (e.g. pre-existing, unknown work orders and zoning violations).
Making FCT title insurance part of all your clients’ real estate transactions protects your practice and reputation by shifting risk to FCT. If the insured’s interest in the property is challenged due to a covered risk, simply leave the defense to us – along with the associated costs.
Upon learning of the claim being advanced against an Alberta lawyer by FCT, ALIA asked FCT how such a claim was consistent with the above statements on FCT’s website, including FCT advertising a “no-fault claims process” and claiming their product “protects your practice and reputation by shifting risk to FCT”. FCT, through its counsel, advised inter alia that its Waiver of Rights of Subrogation specifically excludes instances of gross negligence and willful misconduct, that “FCT fully honours its statement to protect lawyers and their practices under its insurance policies, except in cases of gross negligence and willful misconduct”, and that “FCT is in the process of amending its claim in Action Number…to include gross negligence.”
This notice should not be interpreted as a statement or suggestion that FCT’s actions are improper or contrary to the terms of any policies that they sell to Alberta lawyers. Further, although ALIA is not aware of any title insurer other than FCT making a subrogated claim against an insured lawyer in Alberta, ALIA cautions lawyers to carefully read the policies and waivers of all title insurance products.