Title Insurance And Minor Exemptions
There’s no better way to inform our readers than by sharing an actual client experience, and the lessons to be learned from it.
Our team was recently contacted by residents of Beaconsfield who were planning to sell their home. After our initial “discovery” phone call, during which we ask a lot of questions, we were impressed to learn that they had been proactive and had not only ordered a new certificate of location, but that it had already been completed. We advised them to send us a copy, so that we could review it for them. This all took place before we’d even met the clients or visited their home.
After reviewing the document, we identified a couple of often-overlooked issues. In this case, the two issues were:
1. The overhang of the roofline at the front of the house is too close to the property line. It therefore does not comply with the municipal zoning bylaw with regard to front setback (distance) margin, which is established at a minimum of six metres from the property line. According to the information we received from the municipality, the property could not benefit from an acquired right.
2. The pool pump and filter do not comply with the municipal zoning bylaw with regard to lateral and rear setback margins, which are established at a minimum of two metres from the property line.
It’s important to note that neither of these two issues were described in the old certificate of location from the mid-1990s, and that only the new land surveyor picked up on them. This could be because the municipal bylaws have since changed, or because today’s land surveyors are much more precise. That is why it is strongly recommended to provide an up-to-date certificate of location when selling, preferably no more than 10 years old.
We suspected that the first issue would require what’s known as a “minor exemption” that is granted by a municipality to allow an exception for an outstanding zoning violation. This is a process that can cost approximately $750 and can take several months, as it must be approved by city council in order to be awarded either a “grandfather clause” or some form of acquired right.
The second issue, although less complicated because it wouldn’t require a vote by city council, could prove just as costly to the seller if not properly declared or managed in an offer to purchase. Most notaries, upon reviewing a certificate of location, will recommend title insurance when they discover any non-compliance, and this is usually charged to the seller without them having much choice in the matter. The cost of title insurance is usually about 0.1% of the sale price of the property. So on a $1 million sale, you’re looking at about $1,000.
The biggest problem with these kinds of issues is that they often come as a surprise only days before the signing at the notary… or worse, at the signing itself! This is because many sellers wait until listing their property before ordering their new certificate of location, and therefore it’s not ready until the very last minute before a sale. Having experienced this situation first-hand with both buyers and sellers, we can attest to the fact that it causes a lot of unnecessary tension and stress for all parties.
Back to our “case study.” The next step we took for this Beaconsfield homeowner was to reach out to a few of our trusted notaries to confirm our suspicions. As expected, we were correct!
We promptly notified the prospective seller and they immediately took action by applying for the minor exemption. Fortunately, their timing was perfect and their application was submitted just in time for the next city council meeting. They’re currently waiting for the results, but we remain optimistic, as we have yet to see an application for a minor exemption be refused.
It's always a pleasure to meet people who think like we do. These sellers were proactive, responsive, and willing to follow the advice and guidance that we provided. Our objective is to always minimize our clients’ exposure to risk.
In this case, we were more than happy to share our expertise with these homeowners before we had even secured them as clients. They informed us that they were interviewing two other local brokers, and that they would be choosing the one that they felt were most qualified for the job.
We’re delighted to say that Team Broady will have the pleasure of not only selling this gorgeous Beaconsfield home, but of working with such amazing clients. They made it known to us that one of the reasons they chose us was because of the advice we provided regarding their certificate of location.
Now that we are fully aware of the issues regarding the certificate of location, we can declare them up-front in the “Declarations of the Seller of the Immoveable” form and the Centris listing. We can also be sure that these issues are acknowledged and accepted by any potential buyer when writing an offer. Furthermore, we can specify that if any title insurance is required, it will be at the buyer’s expense, thereby protecting our seller from additional costs and stresses.
If you or anyone you know are thinking of selling, we encourage you to be pro-active, and get prepared sooner rather than later. Don’t hesitate to reach out to Team Broady at 514-613-2988 or by email at firstname.lastname@example.org.