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legalease 60 | winter 2017 cmba-achc.ca CMB MAGAZINE D oes title insurance provide coverage only for defects registered against title, or can it extend to structural defects as well? In the case of MacDonald v. Chicago Title Insurance Company of Canada, 2015 ONCA 842, the Ontario Court of Appeal said it can cover the latter, but it depends on the wording of the policy. e Supreme Court of Canada recently declined to allow an appeal of the decision. e MacDonalds had purchased a family home and, as part of the purchase, acquired a title policy. Seven years later, the MacDonalds discovered that load-bearing walls had been removed during renovation work undertaken by a previous owner without a building permit, rendering the second floor unsafe. e City of Toronto issued an Order to Remedy an Unsafe Building, requiring that work be done to temporarily support the floor. e appellants undertook the required temporary work and made a claim under the Title Policy for the costs of those repairs and the permanent repairs needed to make their home structurally sound. e insurer claimed the policy did not cover such defects. The principles in interpreting insurance policies include that: n ambiguities in the contract language are interpreted against the insurer, having regard to the reasonable expectation of the parties; n coverage provisions are to be interpreted broadly; and n exclusion clauses are to be interpreted narrowly. e policy provided coverage where "[the] Title is unmarketable, which allows another person to refuse to perform a contract to purchase, to lease, or to make a mortgage loan." is is a coverage provision; accordingly, it is to be interpreted broadly. To interpret the provision such that it only covers issues related to the registered title is to interpret it narrowly. e discovery of the dangerous condition of the property would permit a potential purchaser to refuse to close a purchase transaction. e defect makes the property unmarketable for purposes of the insurance policy. e policy contained an exclusion clause providing that there is no coverage for "Title risks … that first affect your Title aer the policy date…." is is an exclusion clause; accordingly, it is to be interpreted narrowly. e title was unmarketable from the moment the property was acquired, even if the unmarketability was not known at the time. Title insurance is different from most insurance products in that, traditionally, it has not insured against a future event; it has been used to insure against losses from a title defect in existence at the date of the policy. Nevertheless, it is also designed to respond to a loss that crystalizes in the future. e unpermitted construction was an existing defect that crystalized when the owners became aware of it. Takeaways Title insurance provides coverage in accordance with the terms of the policy. It is possible that the wording of a particular policy extends to cover matters beyond just the title registered at the land title office; it may also cover structural defects. e insurance company contended that the title policy was never intended to cover the type of loss suffered in the case in question; had it been so, the premium would have been much higher. Assuming the accuracy of that claim, we can expect the insurance company to either raise premiums or make it explicit in future title insurance contracts that the policy does not extend to cover defects beyond those registered at the land title office. Can title insurance cover structural defects? BY RAY BASI, LL.B. STAFF, EDUCATION AND POLICY REVIEW COMFORTER Can title insurance COMFORTER OR HOLEY

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