Accused of making an erroneous interpretation of the Notary lawto cause “great confusion” and to limit the options available to consumers, the Chambre des notaires will have to defend itself in court.
The companies First Canadian Title (FCT) and Fidelity National Financial (FNF), known for their services related to mortgage refinancing and the sale of title insurance, are asking the Court to declare that their services are not the exclusive responsibility of notaries and do not constitute an illegal exercise of the profession.
They also want a judge to force the Chamber to cease any communication suggesting that their services contravene the Notary law.
The hatchet had been buried between the Chamber of Notaries and the title insurance companies since the Supreme Court refused to hear the case in 2019. The courts had ruled that FCT and FNF did not exercise reserved acts .
But now the ax reappears in the wake of the modernization of the Notary law by the Minister of Justice Simon Jolin-Barrette, last October.
From now on, only notaries are authorized to draw up mortgage files and they must carry out all stages of the process themselves, according to the interpretation of the Chamber. Title insurance companies are rather of the opinion that the new legal framework changes nothing and that previous judgments remain valid.
This interpretation by the Chamber also worries mortgage brokers, and has done so since day one, as I reported1.
Moreover, the Mortgage Professionals of Canada (PHC) association “raised the problematic elements with the Minister of Justice,” according to an information bulletin intended for members that I was able to consult. Simon Jolin-Barrette “gave us a good listen,” it says.
The office of the Minister of Finance, Eric Girard, was also questioned by PHC. This would be interested in “the impact of the interpretation of the Chamber of Notaries on transactions and on all financial institutions”. Communications must continue “incessantly”.
“Intimidated” notaries, perplexed lenders
For their part, the FCT and FNF companies are more than worried. They vigorously denounce the harmful consequences of recent communications and training from the Chambre des notaires du Québec (CNQ) on their activities in the province, even citing a risk of closure.
“The CNQ dissuades and even intimidates notaries so that they no longer accept files in which FCT is involved, in that it suggests, wrongly, that the modus operandi of the treatment centers has become illegal, following the “entry into force of Law 23”, indicates the initiating request for declaratory judgment and permanent injunction filed by FCT at the end of the day Thursday.
The Chamber wrote to me to clarify that it would react to the news this Friday.
According to documents filed in court, notaries contacted FCT to tell the company that, no longer feeling comfortable, they no longer wanted to collaborate with it and were cutting ties. And “numerous communications” have been received from mortgage lenders who question the legality of its services in Quebec.
On January 25, the Office of the Syndic of the Chamber, for example, wrote to its members that it was prohibited to accept mandates or directives from third parties limiting actions related to their function as public officers. And that if necessary, he would not hesitate to take the necessary measures. We can see it as intimidation, or we can be happy that a trustee takes his role seriously…
The FCT position is unequivocal: the Chamber of Notaries adopts an interpretation of Law 23 “which has the effect of distorting and grossly exaggerating the scope of acts reserved for notaries” with the aim of excluding it from the Quebec market.
FNF, which is suing Chicago Title Insurance, believes this “controversy” is likely to paralyze its operations and could lead to its closure in Quebec.
Seven years ago, the Court of Appeal determined that it did not see how the protection of the public would be jeopardized by title insurance companies.2. “The objective of protecting the public is thus increased by this double verification,” the three judges even wrote. Today, FCT questions the Chamber’s true motives.
“As a professional order, the main function of the CNQ is to ensure the protection of the public. The actions taken by the CNQ with FCT have no effect of protecting the public, but rather demonstrate a worrying desire to reconstitute a monopoly that the CNQ has already sought to obtain without success. »
As soon as the changes are adopted in the Notary law, it was clear that a confrontation was going to occur. FCT and FNF were not going to withdraw from Quebec without flinching because of the interpretation of an organization which fought them all the way to the Supreme Court and which lost all the way.
How does it work?
To benefit from a better mortgage rate, more and more Quebecers are turning to non-bank lenders, also called virtual or alternative lenders. These companies (First National, Manulife, MCAP, MERIX) absorb the costs associated with drafting the legal documents required during mortgage renewals.
This work is normally entrusted to paralegals from the firms First Canadian Title (FCT) and Fidelity National Financial (FNF), who include in their package insurance covering the validity of the title deeds to the mortgaged property. The files are then transmitted to Quebec notaries who complete the required formalities, verify the identity, quality, capacity, consent and marital status of the borrower before executing the deed.
Title insurance has been part of the Quebec market since the early 1990s. FCT claims to have collaborated in the processing of approximately 600,000 mortgage loan transactions in the province.