How to Prevent Title Fraud

In September 2021, there was an incident where two people were impersonating the owners of a home in the Etobicoke-area. They had hired a real estate agent and put the house up for sale. These individuals were able to successfully sell the home and new homeowners arrived to take possession of the property. This resulted in the original homeowners coming home from their trip to discover that their home had been sold on the market without first obtaining their consent.

Incidents like these, known as title fraud, are very uncommon, but they can be unfortunate incidents wherein the innocent family ends up paying – even when they haven’t done anything wrong.

In this article, Excalibur plans to go over what title fraud is, how to avoid it, and even some hot tips on title fraud prevention.

What is title fraud?

Title fraud, in a nutshell, refers to the theft of a home’s title – i.e., the right to someone’s land. When title fraud occurs, the title of someone’s home is being stolen.

Two types of title fraud or real estate fraud may result in financial loss. Those are foreclosure fraud and, the subject of this article, title fraud.

In instances of title fraud, the thief will try to re-mortgage or sell the home to reap profit, at the expense of both the new buyers and the original homeowners. Title fraud is oftentimes an extension of identity theft, wherein somebody steals your personal information to use it in order to access all kinds of things.

It is possible to prove that you have been scammed in the case of title fraud, but doing so is not easy. In fact, without title insurance, it can take a lot of money, time, and effort to regain the rights to your home’s title and the ownership of your home.

Can title insurance protect against title fraud?

Yes, it can. Title insurance operates no different than any other insurance policy and is designed to protect exactly what your policy documents would entail. Title insurance is typically designed to protect against potential future discoveries about a property, some non-title-related and some title-related. Think of it like indemnity protection for a property that has been mortgaged.

Title insurance premiums range anywhere between $250 to $400CAD, on average. It typically sells for about $1 per $1,000 of your property value. It’s a single, one-time fee and can be passed on to anyone who would inherit ownership of your home.

Title insurance is not a legal requirement in Canada, but sometimes it can be required by a mortgage lender the same way your lender may ask that you purchase home insurance.

How do I prevent title fraud?

Protecting against title fraud means taking preventative measures to securing your asset. You can utilize the following tips to ensure you are protected:

• Research any prospect company or “professional” who is offering you a loan.
• Ensure all your home mortgage information is kept safe and dispose safely/shred old documents rather than simply throwing them away.
• Be sure to consult with a legal advisor before you give another person the permission to deal with any of your personal assets.
• Reach out to your mortgage lender if you are having difficulties with your current mortgage payments.
• Do research on your land title with a territorial/provincial land registry office. This will show the name of the property owner/any mortgages/liens registered on that title.
• Purchase title insurance. It’s an affordable, one-time purchase that can protect you from losses due to title fraud and can be passed down to your estate inheritors.

What do I do if I’m the victim of title fraud?

If you suspect you’ve been a victim of title fraud, do the following:

• Document all you can pertaining to the event, such as the date when you noticed the fraud, what you did, the contact info of everyone you spoke to, dates of communications, etc.
• File a report with the police.
• Contact your provincial land registry office.
• Contact your bank/financial institution and any other companies where your accounts may have been impacted.
• Reach out to Equifax and TransUnion (Canada’s two credit rating agencies) to ask them to put a fraud alert on your file.
• Reach out to the Canadian Anti-Fraud Centre.
• If you have title insurance, contact your insurer to begin the claims process.

Unfortunately, title fraud is extremely problematic, as it can impact both the unsuspecting new purchaser and the true homeowner. In the case of title fraud, the property sale is technically a fraudulent transfer, but it’s all performed in adequate legal processes. This means it can be all the more complicated to have everything undone, and it can take a lot of time, since everything needs to go through the numerous necessary judicial processes.

Title insurance is a cheap solution that only needs to be purchased one-time. Reach out to your lawyer for more information regarding title fraud, how to prevent/avoid it, and if title insurance may be the best way of putting your mind at ease. It’s a clever, long-term solution for a potentially disastrous situation that could really happen to just about anyone. It’s better to be safe than sorry.

Additionally, as a homeowner, you should be purchasing home insurance! Excalibur’s Rate Reducer can help you find the best home insurance rates in Ontario, and after a big purchase like buying a new home – who isn’t looking to save some money? Try out Rate Reducer here.