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Home»Mortgage»Quebec’s legal battle between CNQ and title insurers leaves brokers and homeowners in limbo ahead of mortgage renewal wave
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Quebec’s legal battle between CNQ and title insurers leaves brokers and homeowners in limbo ahead of mortgage renewal wave

November 26, 2024No Comments5 Mins Read
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Quebec’s legal battle between CNQ and title insurers leaves brokers and homeowners in limbo ahead of mortgage renewal wave
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Last year, the province’s notary regulator—la Chambre des notaires du Québec, or CNQ—sparked confusion by claiming that residents are legally restricted from engaging with the country’s two private title insurance providers, First Canadian Title (FCT) and Fidelity National Financial (FNF).

Michael LeBlanc, President and CEO of FCT
Michael LeBlanc, President and CEO of FCT

The companies launched litigation last February in response, but the legal dispute remains ongoing.

According to FCT president and chief executive officer Michael LeBlanc, the recent filing was just the latest in a decade-long legal battle between the title insurers and the provincial regulator, but the stakes are higher this time around.  

“Over the next 16 months, there’s going to be a lot of people who want to renew their mortgage, and renewal is usually a time when our services are engaged, because in many cases, the consumer will be financed with a different institution for a better rate,” he says.

Though FCT and FNF continue to offer their services in the province, the uncertainty around their legal status may drive more Quebecers to work with a CNQ-registered notary, which LeBlanc says typically takes longer and costs more.

“What we’ve heard in the marketplace since they’ve taken this position is they’ll charge up to $2,500 or more dollars to do a transaction that we used to do for $900,” LeBlanc says. “It takes somewhere around five to 10 days for us to do a transaction, and now people are waiting two, three, four weeks to get something done.”

The latest in an ongoing battle

This is not the first time the country’s private title insurance providers have gone head-to-head with regulators in the province. In 2010, the CNQ accused FCT, which has provided title insurance to Canadians from coast-to-coast since 1991—along with FNF—of providing legal services without abiding by provincial requirements.

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“The premise of the action was that the services that we provided in respect to the completion of the transaction—the issuance of a title insurance policy—amounted to the practice of law, and that the services were restricted to notaries,” says LeBlanc, who has been granted permission to also speak on FNF’s behalf.

“The litigation went on for some years, but in the late teens the Superior Court of Quebec determined that their position was not correct and that we were not practising law,” he added.

The CNQ appealed the decision, but the matter was dropped when the Supreme Court of Canada declined to hear the case in 2018. LeBlanc assumed that would be the end of the dispute, but in October of 2023 Quebec lawmakers passed Bill 34, intended to modernize the province’s real estate industry by allowing notaries to offer legal services on digital platforms.

“The CNQ determined that those legislative changes gave them the ability to argue that our services were not in concert with the new legislation,” LeBlanc says. “They actually took a position that providing those title insurance refinancing services in the province of Quebec was illegal, and they indicated to notaries that they were not to work with the title insurers to support the title insured refinance transactions going forward.”

When reached for comment, a CNQ spokesperson declined to provide a statement while the case is under judicial consideration.

In a joint press release, FCT and FNF accused CNQ of “clearly overstepping and misinterpreting the law to extend the monopoly of notaries over the clerical services we provide,” suggesting that they had no choice but to launch a legal action to defend their position.

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“This was not generated by virtue of any concern over the quality or the service itself,” LeBlanc says. “If you go back and read the earlier decision, the court determined that their actions were really about self-preservation rather than the protection of the public, which is what their mandate is.”

Where that leaves brokers, lenders and consumers 

Nearly a year after the legal action was filed, LeBlanc says a court date is yet to be set, and the case is likely to take several more months to resolve.

“We feel very confident in respect to the outcome of the decision, but now we’re in that litigation,” he says.

LeBlanc emphasizes that the latest legal battle—and those that came before it—have not prevented FCT and FNF from providing their services in Quebec, though it has limited the number of notaries that will engage with them.

“There are notaries that are still prepared to work with us, we have been able to continue to offer the title insurance refinance transaction to consumers, but obviously the volumes have been impacted,” he says, adding that there is no risk to brokers, lenders, or consumers. “At the end of the day, if there’s an issue, it’s not with the broker, it’s not with the consumer, it’s not with the lender; it’s with FCT and FNF, and that’s for the courts to decide.”

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CNQ FCT FNF la Chambre des notaires du Québec legal dispute litigation Michael LeBlanc Quebec title insurance title insurers

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Last modified: November 26, 2024

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