Over the past few weeks, there has been a tremendous amount of media attention on title fraud. It has been reported that at least 30 homes in Ontario were fraudulently sold or mortgaged in just the past 18 months. In these cases, fraudsters pose as the homeowners so they can sell or refinance the property and then run off with the money. Homeowners often do not become aware of the fraud until they try to sell or refinance the homes themselves. This has caused somewhat of a panic among many homeowners across the country that may be unnecessary for a couple of reasons.
Firstly, title fraud is relatively rare and extremely difficult to do successfully. This type of fraud requires fraudsters to be highly sophisticated and well-funded. They need to understand the ins-and-outs of property transfers, mortgage approvals, credit checks, legal closing procedures and the safeguards that lenders, notaries, lawyers, and title insurers all take to mitigate the risk of fraud. They also need to be highly adept at document forgery. Law enforcement believe that the recent Ontario cases are almost all tied to organized crime. The fraudsters hire stand-ins to pose as the homeowners so they can keep a distance from the crime. The stand-ins are paid and provided with sophisticated fake IDs that can cost thousands of dollars. The targeted homes must also be carefully chosen to avoid detection. Quite often, this means properties with owners living out of the country. This type of crime requires considerable knowledge, organization and financial investment beyond the abilities of most fraudsters.
Secondly, most homeowners these days have title insurance. If you bought a home in recent years and had a mortgage, chances are that your notary or lawyer ordered title insurance, as it is a requirement by most lenders (unless you opted out of the homeowner’s policy). If you have title insurance and fall victim to title fraud, the insurer will take responsibility for restoring your title and will cover the costs to do so. Title insurers do not actively monitor your title, however. You can only make a claim once you become aware that title fraud has occurred. If this is of concern, you can go one step further and have your title actively monitored by your lawyer or notary, if they provide this service. Under this service, your lawyer or notary would set up a “Parcel Activity Notifier” with the Land Title & Survey Authority, which will alert them if ownership changes or a new charge (e.g. mortgage) is registered against your title. They can then notify you and you can begin the claim process with your title insurer. This is a fairly inexpensive service and will ensure you are able to deal with title fraud in a timely manner.
Although the recent reporting on title fraud has been alarming, we want to let people know that this is not as common as the media have implied, and should not be a concern for most people, particularly if you have title insurance. If you do not have title insurance and would like us to order a policy for you, or if you are interested in our title monitoring service, please contact us.