Title Fraud – Recognizing the Red Flags and How to Mitigate Damages

The term “title” is used in Ontario to refer to the bundle of rights relating to property ownership. Title fraud occurs when a fraudster impersonates a property owner and tries to deal with the property in unauthorized ways. The most common types of title fraud are: i) fraudulent sales, and ii) fraudulent mortgage.

In cases of fraudulent sales, a fraudster would impersonate a property owner and sell the property to an unsuspecting bona fide purchaser. In cases of mortgage fraud, the fraudster would impersonate the property owner to obtain mortgage financing, using the property as collateral for the loan. Certain properties are more vulnerable to being targeted for title fraud.

Properties that have small mortgages or no mortgage at all are usually targeted by fraudsters:

• Mortgage-free homes enable the fraudster to finance the property more easily or allows the fraudster to walk away from the sale with the most proceeds.

• Investment properties that are not owner-occupied are also more vulnerable to being targeted for title fraud since the property-owner may be unaware of what is happening at the property on a daily basis. For example, a fraudster could hire an agent and hold showings, ask a lawyer to provide the proper notices to the tenant under the Residential Tenancies Act to vacate the home, and buyers could move in without the true owner ever realizing.

• Lastly, properties where the owner is away for long periods of time are also more vulnerable to title fraud, for similar reasons.

In general, seniors are most vulnerable targets for title fraud since many seniors have mortgage-free homes and many retirees travel on an extended basis.

Here are a few ways to protect your home from title fraud:

• Your lawyer may purchase title insurance for you at the time of purchase. Purchasing title insurance may not prevent the title fraud from happening, but it will compensate you for the damages.

• If you have owned your home for many decades and your lawyer did not purchase title insurance for you at that time, you may still purchase an existing home policy which will protect you going forward.

• If your home is mortgage-free or your mortgage is very small, connect with a lawyer every few years to check the land registry records to ensure that there are no suspicious transactions.

Contact us if you want to discuss your title insurance or title search needs.

Author:

Jennifer Park

Partner

e: jpark@realtycarelaw.com