Title Fraud is when a Fraudster steals your identity and forges documents to either remortgage your home and walk away with the proceeds or sell your home right out from under you!
It takes someone who knows how real estate and lending markets work on a deep level to accomplish this type of fraud. Typically fraudsters will use stolen identities and forged documents to illegally obtain a registered owner's title. With this information, they are free to open a new mortgage on the property and disappear with the money.
We don't want you to worry, there are insurances in place to help you, as a homeowner, avoid this whole ordeal. Your home will most likely be one of the largest investments you will ever make. What you need is a "good and marketable title" to the property.
Your Real estate Lawyer will confirm that the title to a property you'd like to purchase is properly registered with the government's land registration system, and free from unknown claims or liens. With that good title, you can secure your mortgage, leverage your equity or later sell the property.
Even with that assurance from your Lawyer, you're not protected from Title Fraud. You are still at risk.
Homeowners may not realize they are victims of Real Estate Title Fraud until problems occur.
- In a recent Candian case, The fraud became known when the rightful owner attempted to pay property taxes and was told that, according to municipal records, he no longer owned his home.
- A son learned the bad news when he tried to sell his parents' home and discovered someone else had already sold it fraudulently.
- A woman received a call from a mortgage collector saying he was three months behind on payments for a home she did not even know she owned. Later she discovered two more properties in her name - with a total potential liability of over $400,000.
Who is at Risk?
Bigger cities in Canada can have a larger risk, but it's not secluded so. Any homeowner in the country is at risk of being a victim of Real Estate Title Fraud.
For those of you that are mortgage free, you may be considered the easy target. However, even a property owner with a mortgage can become a victim.
In both cases, mortgage funds are usually sent to a third party related to the fraudster, rather than the owner, and are often unrecoverable.
What happens to you?
This doesn't work like credit card fraud. Financial institutions don't allow victims to suspend payments until after an investigation. For this type of fraud, the homeowner is responsible to prove the crime occurred.
As you can imagine, this can become a very costly problem. It will take considerable time, money and effort to deal with all of the complications that can arise, including:
- Legal costs to defend or deny ownership, often in a court of law
- Lost opportunities to sell or buy another property
- Mental Distress
- Possibility of losing a home
What can you do?
The answer to all of this is to purchase TITLE INSURANCE. This covers the legal expenses and many other costs related to restoring title in cases of real estate title fraud. It's not too late to purchase title insurance even after you've bought the property.
Additional protection Title Insurance offers:
- Structures or renovations previously completed without required permits
- Unknown work orders
- Zoning and by-law violations
Other Frauds to look out for:
- Mortage Fraud
- Value Fraud