The title insurance wars that pitted real estate lawyers fighting for their professional lives against U.S.-based insurers allegedly determined to oust them from the residential market were a mainstay of legal news headlines in the mid-1990s.
Harvey Strosberg, then treasurer of the Law Society of Upper Canada, went as far as coining them the “unholy wars.” To Bob Aaron, then president of the Ontario Real Estate Lawyers Association, traditional title insurers were a “demonic force of evil.”
Nowadays, the title insurance wars have slipped below the radar. But they’re still around.
To be sure, their format has changed.
But as far as many real estate practitioners are concerned, the battle is still about professional survival in the face of the title insurance industry’s potential to reduce or eliminate lawyers’ roles in conveyancing transactions.
“The title insurance wars have been replaced by guerilla warfare in what have become the conveyancing wars,” says Kathleen Waters, president and CEO of LawPRO, the insurance arm of the LSUC that owns and operates TitlePLUS.
TitlePLUS has always been in the underdog’s corner, at least from the lawyers’ perspectives, and heralded by many as the real estate bar’s saviour. In some senses, it’s still the underdog with only three per cent of the title insurance market in Canada.
TitlePLUS was a direct result of the title insurance wars formed specifically to preserve the role of the lawyer in the conveyancing market and counter the intrusion of First Canadian Title Insurance Co. Ltd., Chicago Title Insurance Co. Canada, and Stewart Title Guaranty Co., the traditional title insurers that dominate the Canadian market.
Bar-related title insurance involves three primary twists: lawyers control the insurer; only lawyers can offer TitlePLUS to consumers; and the TitlePLUS policy provides no-fault errors-and-omissions insurance for non-title mistakes made by lawyers providing advice on real estate transactions.
“The bar in Ontario has no problem with title insurance, nor does the law society, which is obvious because we’re a title insurer ourselves,” Waters says.
“But you have to wonder about the aggressiveness that our competitors focus on us because we’re the smallest and taking our business won’t give anyone a big boost in market share.”
The “aggressiveness” that Waters refers to lies largely in the position taken by the Title Insurance Industry Association of Canada, a group of federally regulated insurers, that TitlePLUS has a privileged position in the market.
The association, however, defends its position and noted in a written response to questions from Law Times that it “advocates for fair competition which ultimately benefits consumers of title insurance products.
There have always been and there continue to be concerns with the regulator, LSUC, owning a title insurance company and at the same time setting out the rules of professional practice for lawyers regarding the distribution of title insurance.”
In 2007, First Canadian Title commissioned a report from professor Paul Paton, who was then with the Queen’s University Faculty of Law.
Paton concluded that the LSUC’s ownership of TitlePLUS was intertwined with its regulatory decision-making and raised specific questions about the appropriateness of its involvement in title insurance activities.
Waters also cites freedom-of-information requests from competitors last year as evidence of the undue focus they’ve been foisting on TitlePLUS.
The statistics generated by the information have served to suggest that real estate lawyers are or will be subsidized through inflated errors-and-omission premiums collected by LawPRO from the legal community as a whole.
TitlePLUS denies that allegation and suggests the statistics are being presented out of context.
But Marco Polsinelli, Stewart Title’s senior vice president and general manager for the Canada division, says that characterizing the renewed tension as a “war” may be somewhat misleading.
“It’s true that there has always been some tension around the philosophy of the respective insurers and that’s never gone away,” says Polsinelli, who’s also a lawyer. “But that kind of tension is fair game and, in my opinion, just a result of healthy competition.
And speaking for Stewart Title, we have never wavered in our business philosophy that gives full support to the involvement of the legal community in purchase, finance, and refinance transactions in the real estate market.”
Still, Waters insists lawyers must be vigilant in protecting their positions.
“What’s really at issue is that TitlePLUS has maintained a commitment to the concept that lawyers bring real value to real estate transactions, including mortgages and refinancing,” she says.
A large part of that commitment consists of educational and technological efforts aimed at informing both the public and the profession about the role of lawyers and title insurance in real estate transactions.
There are good reasons for having such a commitment. For example, traditional title insurers’ intrusion into residential mortgage refinancing has decimated the flow of deals to lawyers, particularly to sole and general practitioners.
In Quebec, the conveyancing wars have spilled over into litigation. Earlier this year, the governing bodies of the notary and legal professions in that province launched a lawsuit against several title insurers seeking an injunction to halt what they call the “unauthorized practice of law” that they claim is “compromising the protection of the public.”
The regulators allege some title insurers have gone beyond issuing title insurance policies to “taking over the entire process of drawing up [and registering] mortgages offered by several financial institutions.”
The allegations haven’t been proven in court. But the mere fact that they’re out there is an indication that the title insurance wars — or whatever people choose to call them these days — are far from over.