Imagine for a moment your house destroyed by flames. You pick up the phone and contact your insurance broker to inform them of the situation and, above all, to file a claim. But now, he tells you that even if he cashed your check, he never bought the insurance policy that was supposed to protect you.
Posted yesterday at 6:30 a.m.
That’s pretty much what happened to a couple who bought their dream home in Laval.
His house was not the prey of a major fire. But it is the prey, if I may say so, of several construction companies that are threatening to exercise legal hypothecs.
Why ? Because the contractor who built the residence, Bel-Habitat, declared bankruptcy and did not fully pay its subcontractors. They are therefore trying to recover their due. If Constantin Morariu and Nicoleta Anton do not pay the sums demanded of them, they could lose the house they have lived in since the end of July.
“We are looking for a way to pay the legal mortgages, in addition to our mortgage and legal fees, instead of putting money aside for our daughter’s studies,” laments Nicoleta Anton, her 3-month-old baby in the arm. Her lover adds that all this makes them live “a lot of stress” and that “it [l’]affects psychologically and at work”.
When the couple officially concluded the purchase of their property, in March 2021, the notary Robert Frégeau sold them “title insurance” with the company Stewart Title. This type of policy protects against the risks and damages resulting from the registration of legal hypothecs, he would have explained to them, while adding that this was required by their lender, Desjardins. So they paid the police $700.
The worst-case scenario then happened. After the highly publicized bankruptcy of Bel-Habitat three months later, the couple eventually discovered that protection had never been granted, even though their check was cashed. Around the same time, visits from bailiffs who handed them exercise notices began. Two months before giving birth, Nicoleta Anton would have done well without it.
Amount of notices of legal hypothecs published on their property currently: $108,133.45.
The Frégeau notary swears that “there was no embezzlement” and that he simply forgot to “press the button” to activate the insurance policy.
“It constitutes a clumsiness on my part and on the part of my team […] We were all very saddened by that […] In 45 years, it was the first time I dropped the ball on that,” he told me. The notary claims to have immediately entrusted the file to his insurer, the Professional Liability Insurance Fund of the Chambre des notaires du Québec. “I have protection when you make a mistake. My insurers are there for that. »
The mysteries of the police
The Liability Insurance Fund does not see things exactly the same way. And he did not compensate the owners, deplores the couple’s lawyer, Rafael Ferraro, of the Gowling firm.
In December, the Fund’s lawyer, Julie Guérette, wrote to him that if the title insurance policy had been taken out, only the mortgagee of the Morariu-Antons (Desjardins) would have been covered for the risk linked to the legal hypothecs of anyway. Thus, no compensation can be paid to the couple, because they do not suffer damage.
Rafael Ferraro is surprised that the Fund can thus “describe the content” of an insurance policy that has never been contracted. And he wonders by what logic the notary could have convinced the couple to take out an insurance policy which he could not benefit from, and which would only serve to cover a mortgage creditor.
The lawyer is also sorry that the only avenue left is a civil suit, knowing that it will be expensive for his clients who are already in trouble, and that the Chamber of Notaries has deep pockets to defend its member.
On the phone, the Fund’s representative, Julie Guérette, told me that she had not yet “taken a formal position” and that she continues to “verify”. This glimmer of hope, however, did not come to the ears of the main stakeholders…
After six months of formalities, the Morariu-Antons, who left Romania to settle in Quebec in 2008, are stunned and disappointed. “Institutions in Quebec do not help honest people who work and pay their bills like us. We have no support from anyone, ”deplores Nicoleta Anton, very emotional.
The mission of the Chambre des notaires, which administers the Liability Insurance Fund for its 3,899 members, is clear. It must protect the public, particularly in the event of an error, as the notary Frégeau himself said. “These insurances, I pay for them, and that’s why I pay them. »
“What did I do wrong to deserve this?” wonders Nicoleta Anton. I just wanted to have a new house. I do not understand ! »
I also contacted Desjardins and the insurer Stewart.
First surprise, Desjardins tells me that he “does not recommend the use of title insurance, because the surveyor and the notary produce a certificate of location (reliable cadastral system)”. Its spokesperson Jean-Benoît Turcotti adds that this type of policy “which protects consumers”, and not creditors directly, may sometimes be required, but that this is extremely rare.
Second surprise, at Stewart, this time. The vice-president of operations for Quebec, Julie Lévesque, tells me that her company “does not offer the title insurance product for [protéger] the buyers “. Stewart only sells policies designed to protect financial institutions and this type of policy is normally “paid for by a seller who is unable to fulfill its obligation to transfer clear title”.
How to explain, then, that the notary Frégeau made the buyers pay a policy of $700 rather than the seller? Was the insurance necessary, adequate, required by Desjardins? How was it presented? How could the notary not notice that the policy had not been acquired since he is bound by the Law on notaries to have your trust account balanced monthly?
This unusual case raises several questions.
Struggle not to compensate
The story of Constantin Morariu and Nicoleta Anton is reminiscent of that of a couple from Magog who suffered for years from the errors of a notary. And, to make matters worse, the determination of the Liability Insurance Fund not to compensate him.
The notary had notably failed to register the deed of sale of his residence and to strike out an easement.
Result: the couple lived in a common area of their condo complex without knowing it. He had acquired the sales office, transformed into a house. He discovered the problem by applying for a renovation permit from the City.
Instead of sympathizing, the other co-owners of the complex reacted funny.
“It had come to pass that they wanted to make it a meeting room, a billiard room or a games room. Afterwards, they talked about putting sheds on the ground, they came to play in my flowerbeds, they cut trees,” Lisa Gauthier told my colleague Philippe Teisceira-Lessard. ” [Il y avait] people on our land sunbathing, washing their cars. “Some even allow themselves to enter the building, indicates the judgment. The high class, what!
During this time, the couple tried to be compensated by the Liability Insurance Fund of the Chamber of Notaries. The case ended up in court.
A decade later, in 2018, the Fund was seriously reprimanded by the Superior Court for defending an offending member rather than aggrieved consumers. The judge had denounced that the Chamber had dragged out the process by abusing its rights and that its “only concern” was to “avoid any expense”.
Faced with this “abuse”, the magistrate had imposed two sanctions that are rarely seen in this type of case: the Fund was ordered to pay the couple $50,000 in punitive damages in order to “deter, denounce and prevent” a such behavior. In addition, he was forced to reimburse the couple’s attorney fees.
In short, judge Johanne Brodeur has done everything to ensure that this does not happen again.
Can we now feel well protected by the Chambre des notaires when we know that it must both defend its members and the general public?
“This ‘dual function’, as you say, is specific to liability insurance”, replies its spokesperson Johanne Dufour, while insisting on the fact that “we are not in a context of compensation for no fault, but in a principle of analysis of cases or complaints”.
What remains worrying is that it is almost impossible for ordinary mortals to check on their own whether their notary has done their job well, whether the deeds have been drawn up and published according to the rules of the trade. So it is important that the public have the utmost confidence in the protection offered by the Chambre des notaires.
Compensation claims filed with the Chamber (fiscal year 2021, ended March 31)
- 12 – complaints received
- 5 – claims denied
- 3 – complaints accepted in full
- 0 – complaints accepted in part
- $1,883,501 – Amount of claims received
- $470,053 – Amount paid to claimants
- $11.1 million – Compensation Fund assets