What happens to a property transfer or mortgage financing if the Land Title Office (LTO) is closed and no longer able to accept registrations? Although we are not aware of any current plans for LTO closure, given the number of businesses that have closed due to COVID-19, it is a good idea to be planning for contingencies.
We have spoken with our usual title insurance providers and have been advised that in the event the LTO is closed, their title insurance gap coverage will insure both lenders and purchasers due to intervening registrations on title between the date of closing and the date of registration at the LTO. Gap coverage may also insure a lender’s intended priority position for subsequent loan advances.
Title insurance providers have advised that gap coverage is available provided:
- a title search was conducted within the last 30 days;
- title insurance policies are ordered on or before the closing date; and
- registration documents are submitted immediately when access to online registration is available at the LTO.
In these uncertain times, we suggest our real estate lenders, borrowers and purchasers consider any upcoming transactions they have which may benefit from title insurance gap coverage in the event the LTO closes, and budget accordingly.
Also, in the event a real estate lender does not have title insurance in place for an existing loan, consider whether it is desirable for gap coverage to be obtained to insure the intended priority position on subsequent advances.