Law Times

Law Times • November 1, 2010 An online resource 1.800.263.3269 Focus On REAL ESTATE LAW Navigating the electronic system Lawyers warned about pitfalls of title searches T BY DARYL-LYNN CARLSON For Law Times he introduction of updated Teraview software has changed the way counsel perform title searches, a situation that has some lawyers worried practitioners are overlooking important details. At an educational session hosted by the Ontario Bar Association last month, lawyers were introduced to changes to searches under the Registry and Land Titles acts, along with information on how to conduct abutting land searches, due diligence search require- ments for title insurers, and how lawyers can identify possible red fl ags for fraud. Sidney Troister, a real estate practitio- ner at Torkin Manes LLP in Toronto, de- livered a session on the top fi ve mistakes lawyers make related to the Planning Act. After noticing that many lawyers aren't following all of the steps, he provided participants with a signifi cant amount of detail on how to ensure their electronic search is thorough. "While the electronic system is good, in my opinion it has made lawyers lazy," Troister said. He noted that through the electronic search process, each property is assigned a property identifi cation number. Yet he said lawyers often don't realize there could be more than one number per property or that they have to search behind it to obtain a history of owners to ensure there have been no past Planning Act breaches. As for fi xing titles, "Th ere isn't a lot of fl exibility in what you can do. Th e software dictates how docu- ments can be registered on title," he pointed out. "In the old system, there [was] all kinds of fl exibility to do things, but those days are gone." According to Troister, for "run-of-the-mill transac- tions, it works just fi ne, but if you have to do some- thing creative, there is a good chance you will bump into an issue." Lawyers who don't use the system often or don't ensure their search is thorough could run into problems as a result. Troister added: "Lawyers aren't searching properly. You can pull up the parcel page, but sometimes the property contains more than one PIN. So lawyers get lazy about doing the proper investigation because, under the Planning Act, you have to search back a certain number of years for prior contraventions and 'While the electronic system is good, in my opinion it has made lawyers lazy,' says Sidney Troister. you have to search all abutting lands. "If you make a Planning Act mistake, essentially your document is null and void." Along with his presentation, Troister also pro- vided participants with a 22-page paper explaining the nuances of Planning Act s. 50, which mandates compliance in the way any property can be divided and sold. Steven Pearlstein, a real estate lawyer at Minden Gross LLP, also delivered a session on the complica- tions of doing condominium deals. He started the program by explaining the diff erence in conducting electronic searches for a home versus a condo. "When you buy a house, you own it. When you buy a condo, it's communal living by defi nition, and if the condo sets rules and regulations, there are more things to check," Pearlstein said. "Th e fees for a purchase of a condominium versus a home are the same, but there's a lot more work in- volved in searching a condominium." While Pearlstein's practice focuses largely on com- mercial real estate deals, he often acts as an expert wit- ness in cases in which lawyers are facing negligence allegations. He acknowledges that many lawyers are indeed not conducting thorough searches during November web specials condo sales, particularly when it comes to reviewing the condo corporation's declara- tion document that sets out the rules for the building as well as the nuances involved should it share any common areas with a neighbouring property, which could nullify coverage by a title insurer. "You have to pull the agreements and look at them as it could be something unique to that property," said Pearlstein. Additional searches must take place should the sale include things like storage lockers and parking spots, he noted. As well, he said there have been cases in which the suite number is mislabelled, so it's important for lawyers to obtain a survey sheet to ensure the purchase pertains to the unit advertised. "It's far too complicated for one person to understand the whole system," he add- ed, noting that Teranet is charging $70 to register a document, something he said has raised the ire of many lawyers due to the fact that it adds signifi cantly to the cost of a basic transaction. Th e province's lack of consultation with the real estate bar on the issue is also a concern, according to Pearlstein. "Th ey used to always consult the bar and the law society before they made any decisions regarding the electronic system," he said. Don Th omson, a real estate lawyer at Walker El- lis and chairman of the OBA's real property section, presented a session on the signs of potential real estate fraud. He noted it had been more than two years since the OBA hosted an educational session on electronic search methods despite the fact that the traditional bar admission real estate course was dis- continued in 2005. In Th omson's view, because title insurers also re- quire electronic searches, it's imperative that lawyers get the latest information on how to conduct a search properly. "Th e vast majority of residential transactions are title insured, and depending on the title insurer, there are diff erent requirements for off -title searches," he said. "So we want to make sure that lawyers, when us- ing a particular product, are aware of the title search requirements and the off -title search requirements of each title insurer." LT PAGE 9 Anger & Honsberger Law of Real Property, Third Edition The Commercial Lease: A Practical Guide, Fourth Edition Falconbridge on Mortgages, Fifth Edition Shopping Centre Leases, Second Edition canadalawbook.ca CA082 For a 30-day, no-risk evaluation call: 1.800.565.6967 Canada Law Book, a Thomson Reuters business. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com Editor -in-Chief: Har vey Haber , Q.C., LSM Editor -in-Chief: W alter M. T raub Har vey Haber , Q.C., LSM Anne W arner La Forest

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