5 Things to Know About Title Fraud
By Mark Weisleder
You have heard the famous expression “Who’s been sleeping in my bed”, from the story of Goldilocks and the three bears. How would you feel if you got home after an extended stay overseas and found out not only was someone else living in your house, they had taken over your title as well. This is what happened to a Toronto couple earlier this year.
Here are 5 things you need to know:
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1. How did this happen?
Imposters targeted a vacant home with no mortgage on title and obtained access. They created phony identification papers and then hired a real estate agent to sell the home. The sale was completed through 2 lawyer offices. The innocent buyers moved in and the fraud artists disappeared with the money. Then the new owners came back, demanding the home be returned.
2. What will be the result of the court hearing the case?
If the real owner can prove that they were also innocent, the likely result will be that the home is ordered returned to the original owner. The innocent buyers will be compensated if they have a title insurance policy, for all of their losses. The original owner will have to pay substantial legal fees, even if they win, unless they also have title insurance.
3. Does everyone have a title insurance policy on their home?
If you purchased a home in the last 25 years, it is likely that you have a title insurance policy on your home. Besides protecting against identity theft, which is what happened in this case, you are also protected if the seller has unpaid property tax or water arrears that arise after closing, issues related to prior work done by a previous owner without proper permits that you are now being asked to remove, or boundary issues where you do not end up receiving the total land you expected at closing because there wasn’t an up to date survey available.
4. Can I buy a title insurance policy today if I do not have one?
You can buy a policy today. You just need a real estate agent to do a valuation of your home. The cost is close to $1 per thousand. So for a home valued at $500,000, the cost is close to $500.00. If it is a condominium, the cost is usually $250 lower.
5. How do I prevent this from happening to me, besides title insurance?
Be careful when you rent out your home, to make sure that a proper ID and verification check is done on all tenants, to make sure they are not part of the plan to gain access to your home. Having a line of credit registered against your title may be another way of putting a block on anyone trying to steal your title as well, whether you borrow any money or not. Also, be aware that the title insurance companies, law societies and real estate regulators are putting in place extra system checks as well to make sure that a fraud artist is identified in advance.
Mark Weisleder is a Partner, author and speaker at the law firm Real Estate Lawyers.ca LLP. Contact him at [email protected] or toll free at 1-888-876-5529
