Home Insurance is a requirement of every residential mortgage, however having an effective home insurance policy is a good practice for all homeowners. Under the standard Contract of Purchase and Sale, the BUYER is liable for all RISK in the property as a 12:01am on the CLOSING DATE. The take home point here is that your insurance needs to be in place before the CLOSING DATE. It is a common mistake to delay your policy until a later possession/ moving date thinking that you are not responsible until you get the keys.
There are lots of choices when obtaining home insurance, policies vary in terms of the extent and type of coverage that they provide; Your insurance agent is the best person to advise on everything from a limited specified perils, to a broad form, to a comprehensive policy.
At Pihl Law Corporation, our personal injury litigators know that an important part of any policy is the third party liability insurance. In this portion of the policy, the insurer agrees to indemnify the insured owner for any judgments rendered against them for bodily injury or death arising out of their negligence with respect to the maintenance of their property and activities that may occur on their property, provided the acts or omissions do not fall within specific exceptions within the policy. The insurance company also agrees to hire a lawyer to defend the property owner when a lawsuit is brought against them. The insurance company however, only agrees to pay out to the limits of the third party liability insurance.
Most policies typically come with an automatic $1,000,000.00 third party liability limit. In today’s world, this is probably inadequate and often coverage of up to $5,000,000.00 may be available. Imagine if someone tripped on a loose board on your staircase, and fell down, resulting in a head injury. Compensation would include general damages for pain and suffering, but also probably the injured person’s past and future loss of income, costs of care, and out of pocket expenses. The value of these claims can be large (our law firm regularly sees claims well in excess of $2,000,000), and if the insurance limits are insufficient to pay the whole of the claim, the home owner will be required to pay any shortfall out of their own pocket (or may be forced to sell their home to pay for the resulting judgment).
A. Contracts Must be In Writing
Real Estate Contracts, as contracts for the sale of land, are unique in British Columbia law as s.59 of the Law and Equity Act states that “A contract respecting land or a disposition of land is not enforceable unless there is, in a writing signed by the party to be charged or by that party’s agent, both an indication that it has been made and a reasonable indication of the subject matter”
In the historical case of McKenzie v. Walsh, the Supreme Court of Canada made it clear that no particular form of contract for the sale of land was required, simply a contract “in writing” (email would likely qualify in 2009), which specifies all fundamental terms including: Parties, Property, and Price.
B. Real Estate Agents are Held to a Higher Standard
But, as the fictitious contract case of Wu points out, a suspension case brought by the Real Estate Council of British Columbia, a Real Estate Agent has a an obligation to ensure that the contracts they are presenting on behalf of their clients are legitimate and well intentioned. Therefore, real estate agents (and lawyers) are held to the standard of an expert vis a vis their clients when drafting and presenting contracts.
C. Witness of Documents is Important for Contracts, Essential for Land Title Documents
Having a real estate contract properly witnessed is a cornerstone of a good contract because it validates the contract with the written evidence of an independent third party who may refute later claims of identity, mistake, duress or undue influence during an action for breach.
On the Closing Date, when a transfer or mortgage is to be registered in the Land Title Office, the Land Title Act applies an higher standard stating there shall be no registration or charge registered in the land title registry unless that charge is witnessed properly by an “officer” (which includes lawyers in the Province of British Columbia). This is a key reason why lawyers are an integral part of every real estate transfer in British Columbia.
D. Special Consideration for Corporate Purchasers
Generally the law in British Columbia states that a corporation that does not exist (ie; because it has yet to be incorporated or it has been dissolved), cannot enter into a valid contract, unless that contract is specifically adopted by the corporation after incorporation. Therefore, if you are dealing with a corporate purchaser it is prudent to ensure (by calling your client’s lawyer) that that corporation is in good standing with the Corporate Registry.
E. Special Consideration for Execution by Power of Attorney
Often, elderly or non-resident clients wish another person (other than their agent) to function as their attorney for the execution of documents. Real Estate Agents should ensure that they have a copy of the valid power of attorney and this power of attorney should be registered in the land title office to ensure its validity on the Closing Date.