MORTGAGEBROKER mbabc.ca summer 2014 | 17
lendinguncertainty
A few years ago the Court of Appeal rendered a pair of decisions
that created some uncertainty as to the status of mortgages registered
in anything other than first position. e result of these decisions
was the common policy of obtaining title insurance on all mortgages
that are not ranking in first position on title. e emergence of
CRA's
new, more aggressive stance in regards to super priority trust claims
means that title insurance may now be recommended for all lending
transactions in the hope that these unregistered
CRA claims can be
insured over.
e fast pace transactions in British Columbia renders the notion
of obtaining
CRA clearance certificates and all the other appropriate
searches from government agencies unfeasible in most transactions. As
a result many lenders will insure over the deficiencies that the searches
could have revealed by obtaining a title insurance policy. e reality of
the problem being discussed in this article is that title insurance will
insure over any deemed trust debts of the borrower as of the date of
funding of the mortgage. In the case of a draw mortgage there could be
more than one funding date but suffice to say that the title insurance
coverage will not cover
CRA debts that arise aer the date the mortgage
was funded and the title insurance policy was purchased. is means
that even though a title insurance policy is in place for the lender it will
not protect the lender from debts that arise aer the date of funding.
Also complicating this aspect of the issue is the fact that title insurance
does not survive the discharge of the mortgage from the land titles
system. In many cases the lender will not be aware of the
CRA debts
at any time during the currency of the loan and quite oen at any
•
