Although one might assume that a title search process would be easy for a solicitor in today’s day and age, many Ontario municipalities are far behind when it comes to availability of information online, Toronto real estate lawyer Lisa Laredo writes in Lawyers Weekly.
“Despite programming advances that make websites more user friendly, it can at times be near impossible to find the information solicitors need on a public website. Every city website, while generally appearing the same, is very different and groups information differently. Information can be buried under obscure headings, or be available only in part in several different spots, requiring you to check multiple pages to get the full answer to a question,” explains Laredo, principal of Laredo Law.
Many sites, she explains, do not offer online ordering or payment, even for a digital records search.
“Requests must be mailed with payment and physically dealt with by a city employee, who then sends the reply back through the mail; even the timeliest response can spend a week or two in transit. The sites that do offer online ordering or payment, or an increased ‘rush fee’ to have the response faxed or e-mailed back instead of simply mailed, are few and far between. This delay can also pose serious problems for clients who have a quick turnaround between finalizing the agreement for the purchase and the closing of the purchase transaction.”
Websites can also contain incorrect information, such as an out-of-date fee table, requiring new cheques to cover the discrepancy and more time added to a time sensitive process.
The real issue, explains Laredo, is the cost to the client.
“A proper inquiry into the property and title is essential for a lawyer to fulfil her duties to a purchasing client. Wasting unnecessary time navigating complicated websites, awaiting essential responses, or fixing errors resulting from misinformation translates to extra time spent by the lawyer and extra cost to the client. For lawyers complying with requisition dates, which is paramount to ensuring good title, the lack of online support for real estate transactions makes reaching deadlines for closing difficult, often times leads to a holdback of a portion of the closing funds or extensions for the closing date,” she writes in the article.
At the same time, Laredo explains that these issues have been somewhat lessened by the introduction of title insurance, which insures against a loss arising from failure to pay property taxes, breach of zoning bylaws, encroachments and other non-title regulations.
“In other words, the title insurance company has made an educated decision that in the vast majority of cases, there will be no infraction and therefore the overall risk in insuring against the specified losses is minor.”
As a result, she says, in cases involving a single family residential property where the client has agreed to a policy of title insurance, the solicitor is no longer required to do most of the off-title searches that were previously considered prudent.
For the solicitor, Laredo explains, the policy reduces exposure to liability by transferring the risk of negative search results, simplifying the handling of the file and saving time. But as a result, she adds, many off-title searches are not made, and defects that may have been discoverable through the searches now lie dormant and appear sometime down the road.
“While the number of off-title searches may be declining because of title insurance, there is still a need for the legal profession to obtain this information, especially for industrial, commercial and multiple occupancy properties. Electronic access to this information can only serve the public interest,” writes Laredo.