Thursday, January 5, 2017

Will Title Insurance cover a hidden defect?

How could insurance cover a Hidden [latent] defect?

By its very nature, it is something hidden.

Not so fast .....

the case revolves around Paul and Stefanie Macdonald who bought a home in the city that they believed had been poorly renovated by its previous owner. When they attempted to undertake renovations of their own, they found that load-bearing walls had been taken out without building permits – making the second floor unsafe for use. This prompted the city of Toronto to issue a work order to support the unsafe floors with the Macdonalds paying out $75,000. They made a claim to Chicago Title on their insurance policy to cover these costs because the policy was said to provide coverage if the title was unmarketable. However, the claim was denied as the company stated that it was not covered under the policy.
This, in turn, prompted court action beginning in 2014, with the judge ruling that the municipal work order resulted from a hidden defect that was not covered under the policy. It stated that the work order did not affect “ownership of the land” as it was not registered on the property title – even though work orders are never registered against the title.

 It was last year that the decision was reversed with the insurer ordered to pay more than $50,000 in costs with the ruling suggesting the hidden defect made the title unmarketable. Now an appeal by the insurer has been dismissed and the ruling upheld.

So  what's the conclusion?

The situation will be taken under advisement and studied by the Industry.   I am sure if you are in the situation to sue; you now have case law in your favour.

Do you check the insurance claims history of a house before you buy? 
You can actually    With a Home Verified Report

#AskPylyp   Work with an experienced agent.

Call me   Let's talk 

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