Law Times

PAGE 12 FOCUS January 19, 2009 • Law Times New insurance debuts as market softens BY DARYL-LYNN CARLSON For Law Times F or many lawyers running a smaller-volume practice and seeing a slowdown in business, they are hardly en- thused to have to pay more for their professional insurance. But any lawyer undertaking real estate transactions for clients must apply for, qualify, and pay the additional $500 per annum for LawPRO's new errors and omissions insurance that protects against fraud related to all means of real estate transactions. The insurance, which became effective last April, was introduced as an option for lawyers to provide insurance protection to ensure that members of the public, and Land Titles Assurance Fund, are guarded against the registration of fraudulent instruments under the Land Titles Act. At the outset of introducing the practice-specific coverage, LawPRO anticipated upwards of 6,000 lawyers of nearly 22,000 li- censed for private practice in On- tario would opt for the new real estate policy although Duncan Gosnell, LawPRO's vice president of underwriting, says more than 7,000 have signed up. "That would include lawyers whose primary or secondary practice area is real estate but also lawyers who really only intend to do a few deals a year," explains Gosnell. He says that lawyers who don't expect to do much volume in real estate work can purchase the insurance at a pro-rated cost for just a few months of the year. "If it so happens that they're only handling a few deals in one time or another during the course of a year, then they might pick up that coverage for a few months at a time and then let it go." As defined in LawPRO's real estate practice coverage informa- tion, the types of work for which additional insurance must be purchased is broadly defined. It means any practice that concerns the registration of any instrument under the Land Titles Act and/or an actual or contemplated trans- fer, charging, insuring, or other means of affecting an estate, right, or interest in a property. It may also include the receipt of instructions, preparation of Continued from page 11 'Streamline' the process, says Schwartz He points out that in the Greater Toronto Area lawyers use a variety of documents provided by soft- ware companies that are all different in format. "I can tell you we bump heads," he says about dealing with colleagues representing the other side of a transaction who may differ about details set out in the content of the various forms, their order, and their import. "Maybe not as often as you'd think, but enough as we each have our own views." Schwartz says he's familiar with the standardized forms used by the Ottawa bar and suggests a similar documents, searches, and the pro- viding of an opinion or certificate with respect to a title, transfer, or charge relating to the issuance of any title insurance policy. The purchase of the insurance is the only means for lawyers to gain access to Ontario's electronic registry system, for which practi- tioners are issued a password. "If indeed you're a new call or someone who is practising real estate for the first time or moving back to practise in the area of real estate law, then at that point you would apply for this coverage and once this coverage is in force, you will be able to apply for your e-reg access," says Gosnell. The practice insurance is de- signed to complement title insur- ance, which also covers fraud. If only one lawyer in a firm has initiative province-wide would be helpful. "If we can streamline the process, there would certainly be an efficiency created." He adds that those who practise real estate who are unable to attend the OBA session — or who han- dle only the occasional real estate deal — can access a copy of the proposed Ontario standard closing docu- ment on the OBA web site after Feb. 2, or log on to www.lawyersworkinggroup.com to obtain a copy. Lawyers are encouraged to provide their thoughts on the proposed document so the Working Group can release a thorough, final version by spring. LT assumed responsibility for register- ing all transfers its lawyers under- take, their colleagues and partners are not off the hook. All lawyers who practise real es- tate in any capacity must purchase the additional coverage. On its web site, LawPRO in- cludes a self-assessment tool in the format of a questionnaire to help lawyers determine if they are subject to the new insurance requirement. It includes 12 questions that pertain to providing legal opin- ions on matters ranging from land development to wills or even mu- nicipal tax law compliance that, while it may not appear obvious, would render a lawyer subject to purchasing real estate coverage. Lawyers who respond "yes" to any one of the 12 questions in- deed must purchase the coverage. Gosnell hails the insurance as a positive move for both the public and the profession in general. "Anything that enhances the protection of the public at large, everybody's going to benefit and if those situations that could somehow involve lawyers are weeded out and avoided, then that's a positive for the entire profession as a whole." Jeffrey Schwartz is chairman of the OBA real property section. He practises law at Schwartz & Schwartz, a three-lawyer firm in Toronto, and suggests the insur- ance requirement is a bittersweet development. The additional policy has tak- en effect just as the economy has swirled into a downturn and prac- titioners at smaller firms are doing less real estate work than usual. "There's been a shift in the risk of fraud from land titles to LawPRO, the purpose of which is to try to make claims issues dealt with a lot quicker," Schwartz acknowledges. "So it obviously shifts some of the burden to us. It's an out-of- pocket and it's another piece that we have to come up with and is tough in these times to pay any- thing more than we absolutely have to," says Schwartz. But he says likely most prac- titioners would concur the de- velopment is overall a positive move that will protect clients' interests and lawyers' integrity in the long run. "In my view and it's fair to say the (OBA real property) execu- tive would agree with me, there is much that has happened in the last year that has not been a bad thing in terms of changes that help lawyers overall," he says. The bar, with the backing of the provincial government, suc- cessfully rebuffed lender out- sourcing, which threatened to usurp the role of lawyers involved in real estate transactions. "Our place in the transaction has been confirmed, a transfer has to be done by a lawyer so that means we get conveyance work. Had we not affirmed that, we would be competing for work against large companies, so that's a good thing for real estate lawyers," Schwartz says. Ultimately, he says, any and all initiatives that serve to protect clients and subsequently their law- yers is welcome despite the cost. "In this economy, all of us are feeling the pinch. There's no ques- tion business has declined," he says. "But it's not a disaster. The goal is to look out for clients and make a living at it. Anything that helps us do that is good." LT Teranet.indd 1 www.lawtimesnews.com 1/15/09 11:45:14 AM

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