The Claims Corner
by Rosanne Manson, B.A., LL.B.
Claims Examiner, LAWPRO

As a TitlePLUS claims examiner, I have had the opportunity to review and resolve a number of claims on behalf of mortgagees who were also insureds under their TitlePLUS policies. In one instance, I had the good fortune of being able to help our insured mortgagee quickly resolve a claim under her TitlePLUS policy. You will see from the facts set out below that using TitlePLUS benefited not only the mortgagee but also the solicitors who acted on the transaction.

In this case a mortgagee provided a $30,000 loan to a mortgagor which was secured against the mortgagor's property. On the advice of the mortgagee's solicitor, the mortgagee purchased a TitlePLUS mortgage lender only insurance policy. The mortgagor was independently represented. The $30,000 was provided to the insured's solicitor who disbursed the funds pursuant to a direction from the "mortgagor". It was subsequently discovered that the mortgagor's solicitor, who had not acted for the mortgagor previously, had not requested the mortgagor provide him with identification. The woman who had attended at his office and signed the mortgage was an imposter who forged the mortgagor's signature. The transaction was a fraud perpetrated by the boyfriend of the property owner (with the assistance of an unknown woman). The mortgage immediately went into default and a claim was asserted by the insured under her TitlePLUS policy.

This claim was clearly covered by the fraud/forgery provisions of the TitlePLUS policy. Had there not been a TitlePLUS policy in place, the mortgagor's solicitor, who was negligent for failing to make the necessary inquiries as to the identity of the mortgagor, would have had to seek coverage for the claim under his professional liability policy. Due to the fact that the mortgage document itself was forged, based on the doctrine of deferred indefeasibility which is presently the law in the province of Ontario, the mortgagee could not have made any recovery from the Land Titles Assurance Fund. As it was, it was three month to the day after the claim was received in our office that our cheque was issued to the insured, paying out her mortgage. TitlePLUS then took an assignment of the insured's mortgage and TitlePLUS has actually recovered a small amount from the owner of the property to the extent we could prove that she benefited financially from the fraud.

In short, this was a win/win/win situation:

• the insured/mortgagee was fully insured for the loss and received payment under her TitlePLUS policy promptly;
• the mortgagee's solicitor was able to facilitate the resolution of the claim, thereby maintaining a positive relationship with a contented client;
• the mortgagor's solicitor, whose negligence contributed to the perpetration of the fraud, did not have to submit a claim under his professional liability policy.

Actually, it was also a win situation for me. This claim was covered under the insured's TitlePLUS policy. I was able to confirm coverage to my insured and promptly pay out her claim. Isn't this the way an insurance company should respond to a claim? Talk about job satisfaction!