Title fraud appears to be sweeping the GTA. Title fraud goes something like this; one day, a rightful owner owns their home. The next, it’s someone else’s. Indeed, recently an 89-year-old North York man was left heartbroken when his $450,000 bungalow was stolen from him by title fraud. Many people have been left wondering how this could have happened and how could they have protected themselves in the first place?
What is Title Fraud
Legal ownership of a property is evidenced by the property’s title being placed in the owner’s name. Homeowners obtain title when the vendor of the property signs a deed transferring ownership. Once this occurs, the government land registration records reflect the new owner.
Title Fraud or “theft” of a home is the unauthorized transfer of a property’s deed (also known as title) from the existing homeowner to a new home owner.
This can occur when someone forges the signatures of the actual owner and takes title themselves. Sadly, because of how easy it is today to obtain false identities, this practice has been on the rise. The “fraud artist” also may forge the bank officials’ signatures, allowing for a discharge of the mortgage.
The final leg of this “fraud” occurs when the individual goes to a lending institution and obtains a mortgage on the property.
The solicitor who is acting for the lender will conduct a title search, which will validate that the owner is as stated on the deed. Of course, this has all been falsely conducted. Regardless, the mortgage money is advanced to the con-artist who then disappears. Only when the payments are in arrears does the legitimate owner become aware of what has transpired.
So What Happens?
As hard as it is to believe, even though the original owner had no hand in this “master plan”, the bank does have a mortgage that is in arrears and the bank consequently can sell the property with no compensation to the legitimate owner.
How does one protect themselves?
In general, losses from title fraud are massive with homeowners paying thousands in legal fees to defend their title and lenders often losing the full amount of the mortgage.
Previously, title insurance was available only at the time of purchase. But today, be- cause of these issues, title insurance companies will provide insurance to the homeowner at any time to protect against such losses. This policy provides a broad range of coverage, including protection against losses resulting from real estate title fraud. The policy cover- age lasts for as long as the homeowner owns their home.
The government is also looking at measures to eliminate the ease of title fraud. In particular, there is talk of changing the land-registry system.
Real estate title fraud is reaching epidemic proportions and innocent homeowners and lenders are proving to be irresistible targets for fraud artists. Organized crime rings are specifically targeting legal professionals who are unknowingly assisting in perpetrating the frauds on a large scale.
To obtain peace of mind from this fraud, a homeowner can contact their lawyer who can arrange to obtain such a policy. The call might save you your home.