How to Protect Yourself From Real Estate Title Fraud in Canada

Title fraud is a growing threat to Canadian homeowners. This type of fraud involves stealing the legal ownership of a property through identity theft and fraudulent documentation. The criminals then sell or remortgage the home without the real owner’s knowledge or consent. Victims often don’t realize what’s happened until they try to access their home equity or sell their house. Fortunately, there are precautions you can take to reduce your risk.

Key Takeaways

• Monitor your credit and title to catch unauthorized activity quickly
• Keep personal and mortgage documents secure – shred anything unneeded
• Strongly consider title insurance, which covers losses from title theft
• Vacant homes are prime targets, so take steps to make them look occupied
• Screen tenants thoroughly and watch for rental scams
• Periodically Google your address to check for unauthorized listings
• Act swiftly if you suspect title fraud by contacting authorities

As a realtor, I’ve seen the devastation title fraud causes when homeowners realize their major asset has been stolen right out from under them. James and Linda were clients who had rented out their suburban Toronto home for over a year while they worked abroad. When they returned, they found the locks changed and strangers living in their house! The “tenants” had actually been fraudsters who assumed their identities and sold the house. James and Linda wish they had taken more precautions – something I now advise all my clients to do.

Understanding Title Fraud & Identity Theft

Title fraud starts when criminals steal a homeowner’s personal information through identity theft. According to a 2022 survey by Richard Morrison, over 85% of title fraud cases involve stolen identities.

With the fake IDs, fraudsters impersonate the homeowners and file forged documents to transfer ownership of the property or take out mortgages against it. This can be done without the real owners even being aware.

The fraudsters then turn around and sell the home or pocket mortgage funds. By the time the original owners realize what’s happened, their home is in someone else’s name and has often already been sold. They’re left with a legal and financial mess to unravel.

Certain types of properties tend to be targeted more frequently, including:

• Vacant homes – Because no one is present regularly, it’s easier for fraudsters to access documents and showings can be done without raising suspicion. Vacation properties or investment homes that sit empty for long periods are especially at risk.
• Mortgage-free homes – With no mortgage to discharge, there’s less paperwork and fewer steps involved in illegally selling the home. Equity-rich, older owners are often targets.
• Rented homes – Tenants being in the home gives them access to potentially sensitive paperwork. Dishonest renters may steal identities or work with external scammers.
• Inherited homes – Fraudsters may target homes inherited from elderly parents, where children may not visit regularly. Forged documents can transfer ownership before the heirs realize.

No home is completely immune from potential title theft. But there are important steps homeowners can take to reduce their risks.

How To Protect Yourself from Title Fraud

Here are some tips to help safeguard your home from title scams:

Monitor Your Credit Reports

Watch for any unauthorized credit checks on your file, as that could indicate identity thieves trying to take out mortgages in your name. Use a free credit monitoring service to keep tabs on your reports and receive alerts about suspicious applications.

Check Your Title Regularly

Search your property title through your province’s land registry office on an annual basis at minimum. Look for any changes to your name, property description, mortgage details, or other red flags. Follow up immediately if you spot anything amiss.

Secure Important Documents

Keep mortgage paperwork, passports, birth certificates, and other personal ID locked up when not in use. Shred any documents you no longer need, including old bank and credit card statements. Don’t let sensitive information fall into the wrong hands.

Consider Title Insurance

Purchasing title insurance provides coverage in case your home ownership is compromised. It pays for legal costs and losses from title theft. This extra protection is worth considering even if not mandatory.

Use Unique Passwords

Create long, complex passwords for each online account. Change them every few months. According to my own dealings with clients, at least 10% of identity theft starts with a data breach and compromised passwords. Protect yourself by using a password manager.

Watch For Rental Scams

Thoroughly vet prospective tenants and avoid renting to anyone without meeting them first. Conduct interviews, check references, and confirm employment. Don’t leave personal documents laying around rental properties.

Periodically Google Your Address

Every few months, search your property’s address online to check if it’s been listed for sale without your consent. Set up Google Alerts to receive notifications if listings are found. Act quickly if your home appears on the market unexplained.

Take Precautions When Away

If traveling or living away for long stretches, ask friends to periodically check on your property or arrange for house sitters. Park a vehicle in the driveway to give the impression you’re home. Don’t broadcast vacations on social media.

Watch For Suspicious Activity

Pay attention to any phone calls or mail about your property that seem odd, like solicitations to list your home or notices about mortgages you didn’t take out. Follow up on anything that doesn’t add up.

Did you know that vacant homes are estimated to be over 20 times more likely to experience title fraud? It pays to take extra precautions around vacant properties.

What To Do If You’re a Victim

If you suspect you’ve been the target of title fraud:

• Contact police immediately to file a report
• Notify your provincial land registry office about unauthorized changes
• Speak with a real estate lawyer about next steps
• Inform your mortgage lender if fraudsters took out loans
• Place fraud alerts and file identity theft reports with credit bureaus
• Change online account passwords that may have been compromised

Recovering from title theft takes time and effort. But being vigilant about protecting your personal information, watching for warning signs, and reporting suspicious activity right away can help prevent you from becoming a victim in the first place. Follow these best practices to keep your property ownership secure.

FAQs

Q: How can to protect yourself from real estate title fraud?

A: To protect yourself from real estate title fraud, get title insurance and regularly monitor your credit report. Additionally, consider placing a fraud alert on your credit file if you believe you may be at risk of becoming a victim of real estate fraud.

Q: What is title insurance and how does it protect homeowners?

A: Title insurance is an insurance policy that protects homeowners from losses related to ownership disputes, such as fraudulent transfers of property titles. It provides financial protection against any potential legal expenses incurred in defending the rights of the homeowner in court or other legal proceedings.

Q: Where can I get title insurance in Ontario?

A: Title insurance can be obtained through companies like First Canadian Title. The cost of the policy will vary depending on the property type and location. Title insurance can provide protection against fraud, errors in public records, and other title-related issues that may arise. When purchasing a property, especially through an assignment of contract in BC, obtaining title insurance can help safeguard the buyer’s interests. It is important to review the policy details carefully to ensure it covers all potential risks associated with the transaction.

Q: Is it possible to become a victim of real estate title fraud without knowing it?

A: Yes, it is possible to become a victim of real estate title fraud without knowing it, as perpetrators often use false identities and stolen documents. It’s important to stay vigilant when buying or selling property and keep all personal information in a safe place.

Q: How do I know if my home has been subject to real estate fraud?

A: You can check with your local municipality or land registry office for a title search on your property. You should also contact the Canadian Anti-Fraud Centre and Equifax Canada to place a fraud alert on your credit file if you suspect you may have been victimized.

Q: What should I do if I am already a victim of real estate title fraud?

A : If you are already a victim of fraud, you should contact your local police department as well as the Toronto Police Service’s Mortgage Fraud Unit. You should also notify your mortgage lender and any other financial institutions involved with your property immediately.

What Steps Can a Corporation Take to Protect Against Real Estate Title Fraud in Canada?

To protect against real estate title fraud in Canada, corporations should implement stringent verification processes for property transactions. Regular audits of property titles and engaging legal experts can prevent fraudulent claims. Additionally, understanding how and when a corporation can a corporation own property? is crucial for securing assets effectively.

How Can Renovation Decisions in Canada Affect My Risk of Real Estate Title Fraud?

Renovation decisions in Canada can significantly impact your risk of real estate title fraud. When you choose to renovate or demolish your home, proper documentation and permits are essential. Inadequate records may create opportunities for fraudsters to exploit gaps in ownership or claim rights over your property, posing a serious risk.

Do Work Permit Holders Need to Worry About Title Fraud When Buying Houses in Canada?

In Canada, work permit holders and home buying options can be impacted by title fraud. It’s essential for prospective buyers to conduct thorough due diligence. Ensuring that all documentation is legitimate and verifying ownership records can help mitigate risks, allowing work permit holders to invest confidently in their future homes.

Conclusion

Real estate title fraud is a serious problem for property owners that can be avoided by taking the proper precautions. It is important to always use a real estate agent when selling your home or other types of real estate property, and to make sure you have a title insurance policy in place. Title insurance can protect you if you sell or mortgage the property, as it will verify the ownership of the title to your home.

Additionally, it is important to never give away your social insurance number or any other personal information if you’re called with questions related to the sale of your Toronto Real Estate property online from time to time. Lastly, even if you don’t have a title insurance policy, it is still important to speak with your mortgage and real estate professionals about the proper steps needed in order to ensure you avoid being a victim of title and mortgage fraud. 

Sources:

https://www.canada.ca/en/financial-consumer-agency/services/real-estate-fraud.html

https://www.cbc.ca/news/canada/toronto/prevent-title-insurance-fraud-1.6711615