Title Fraud – How You Can Protect Yourself and Your Home

Title fraud is a crime that is on the rise in Canada, particularly in areas with high real estate value and an increasing real estate market such as southern Ontario. The majority of the public, however, are unaware of the possibility of fraud against their homes or how they can protect themselves.

When a person purchases a home, their lawyer ensures that the buyer has “good title” to the property, meaning that the buyer’s ownership is properly registered and free from any unknown claims, liens or encumbrances against the property. This ensures that the property is “marketable” or that the person will not have any legal difficulty in selling their property. A lawyer will present their opinion as to a buyer having good title to the property in a report to the buyer. But what happens if you later become a victim of fraud?

Title fraud comes in many forms and usually involves the use of false identities and the artificial inflation of property values. One common form of fraud is where someone refinances a homeowner’s property by forgery and fake identification, receives the mortgage funds from the bank and runs away. Another example is where someone transfers title out of the homeowner’s name, mortgages the property without their knowledge and receives the funds for the mortgage. The general goal of the person perpetrating the fraud is to finance the property and abscond with the proceeds.

Unfortunately, victims of title fraud almost always end up incurring extensive legal costs in defending their title to the property as the onus is on the homeowner to prove the crime and restore their title to the property. The legal opinion given by the lawyer who acted on the purchase of the property is of no real help to the homeowner as it does not apply to future dealings with the property other than to say that the homeowner had good title when they purchased the property.

A simple way for prospective buyers and existing homeowners to protect themselves from fraud, as well as other title defects, is to purchase the added protection of a title insurance policy. A title insurance policy protects a homeowner from any loss or damage resulting from fraud or forgery, including the cost of defending the homeowner’s right of ownership in the property. It also protects against other title issues such as survey defects, encroachments, zoning infractions, contravention of subdivision and development agreements, lack of building permits for renovations and more.

A title insurance policy can be obtained by the lawyer on behalf of a homebuyer prior to the closing date and is also available to existing homeowners. It is a one-time premium and it covers the homeowner for as long as they own the property. For more information regarding title fraud or title insurance, please contact your lawyer.

The foregoing should not be considered to be legal advice and should not be relied upon as such. Please consult a lawyer to get advice and an opinion on your unique circumstances.