Quebecers who change mortgage lenders to get a better interest rate have been facing long delays since the start of 2024 before being able to go to the notary. Some have lost hundreds or even thousands of dollars in penalties.
This is what happened to Guillaume Paré and Stéphanie Beaudet, owners of a cottage in Lanoraie, in Lanaudière, for 2 years.
The National Bank, where they were clients, offered them a rate of 7% while a mortgage broker found them one of 5% at Manulife, which convinced them to change lenders.
But what was supposed to be settled before the loan expired on December 15, 2023, was concluded a month later.
Neither Manulife nor its partner in the transaction, the title insurance company FNF, could find a notary in time. Each day that passed increased the penalties calculated by the National Bank. “It went up to $2,700. […] This is practically the capital we paid in the year. It’s as if we were saying that last year we only paid interest on our loan,” laments M.me Beaudet.
Guillaume Paré and Stéphanie Beaudet
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New law
These delays originate from a new law to modernize the notarial profession, adopted last fall by Quebec.
It has rekindled an old war between notaries and title insurance companies. Because in addition to selling policies, these companies also prepare, at very low prices, legal documents from banks used for mortgage refinancing (see box).
And that’s where it doesn’t work anymore. With the new law, this work would now be exclusive to notaries.
The Chamber of Notaries welcomes this new law. According to its president Hélène Potvin, this will “bring the notary closer to the citizen so that he can better inform him of his rights”.
Hélène Potvin
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In January, the Chamber notified its members that they no longer had the right to accept documents prepared by title insurance companies.
As a result, notaries who continue to accept mortgage refinancing files with documents prepared by title insurance companies risk being slapped on the wrist by their professional order.
Hence the delays in finding a notary who still accepts them, as Véronique Caron, mortgage broker and manager at Multi-Prêts, observed: “I have 5 to 6 files to manage every day because there are delays with FCT,” she says.
$1200 penalty
A situation for which Abel Chouinard, who owns a co-ownership in Montreal, has also paid the price. He decided last fall to leave Desjardins for the National Bank. The BN offered him a credit of $900 to cover notary fees.
Under the advice of his mortgage broker, he uses the services of FCT, the other big title insurance company in Quebec. The renewal scheduled for November 19 finally took place 3 months later. These delays cost him more than $1,200.
“It’s as if we had chosen a discount airline and ended up with the same price as an Air Canada flight. It’s a little frustrating,” laments Mr. Chouinard.
Legal proceeding
The two main title insurance companies in Quebec are therefore suing the Chambre des notaires and asking the Court to clarify this question once and for all.
“We are not seeking legislative changes through this lawsuit. On the contrary, we simply seek to maintain a well-established process that has benefited consumers and financial institutions for three decades,” said a spokesperson for the two companies by email.
In the meantime, mortgage brokers fear even more delays given the volumes of renewals anticipated in the coming months.
While waiting for this to be resolved, Stéphanie Beaudet hopes that the banks will be accommodating towards consumers.
“We did everything according to the rules. We met the deadlines. We were even early. But despite that, ultimately it’s us who pay the bill,” she laments.
Title insurance in brief
- Two companies occupy most of the title insurance market in Quebec: FNF and FCT
- These insurance policies cover around thirty risks not taken into account by home insurance and which the notary cannot guarantee. Example: identity theft, or encroachment on a neighboring lot.
- These companies also offer services to prepare mortgage refinancing files. It is these services that are in danger with the new law.