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Preventing Title Fraud In Real Estate Transactions
Disclaimer: This article on title fraud is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Recently, a couple in Etobicoke came home from an extended business trip to a nasty surprise. Their home had been sold while they were away. Two individuals posed as the owners, hired a real estate agent and were able to sell the home.
Police discovered a similar situation in Toronto; however, in that instance the sale did not actually close.
Whether it is in the news or anecdotally, we are hearing increasing reports of title fraud. Additionally, it seems that these criminals are becoming more sophisticated. Experts say they have fake identification that is almost indistinguishable from the real deal.
In this article, we will talk about ways that you can protect yourself and your property.
What is title fraud?
Title fraud occurs when someone illegally obtains your title deed. They then use it to try to sell or mortgage your property without your permission. Fraudsters do this through forged documents, identity theft, or by taking advantage of those who may not understand the implications.
Who is most at risk?
Cases of title fraud are more common when:
the owner is elderly, disabled, or vulnerable;
the owner has no family members to help manage the property; or
the owners’ estate is not properly set up.
Other potential targets of title fraud are those who own multiple properties, such as real-estate investors and landlords.
Typically, fraudulent homeowners will target houses with “clean title”, meaning that there are no mortgages or other liens on the property. If a house has a mortgage on title, for example, the bank or lender is involved and the sale becomes more complicated. The higher risk for the criminal may motivate them to look elsewhere.
They will often target homes that are vacant or newly purchased, as these have less likelihood of raising suspicion.
How can you prevent title fraud from happening to you or your family?
There are a couple of ways to prevent title fraud. (In a separate article, we will discuss protecting your relatives who might be elderly or otherwise vulnerable.)
Protect Your Identity
The first step is to protect your identity. Make sure that you keep all important documents such as drivers licenses, birth certificates and passports in a secure place. Additionally, if possible, sign up for an identity monitoring service that will detect any changes to your credit or personal information.
There are a few resources that can be helpful in protecting your identity below:
Purchase Title Insurance
The best way to combat the negative impact of title fraud is to purchase title insurance.
Title insurance is a type of insurance policy that protects the owner’s right to their property. If a title fraud issue arises, the title insurance covers all costs associated with rectifying it, including legal fees and other expenses.
Lenders typically require title insurance when you apply for a mortgage. However, even if it is not required, we strongly recommend that you purchase it. The relatively small payment for title insurance is far less than what you would incur if your property were stolen.
Have a mortgage or line of credit registered on title
Given that properties with clean title are generally more likely to be targeted, consider registering a mortgage or a Home Equity Line of Credit (HELOC) on your property. Even if it is for a small amount, it will make it more difficult for a criminal to sell or mortgage the home without your knowledge.
Expert Legal Advice With Beeksma Law
We know that your house is more than a house. It’s your home, and we understand how important it is to you to keep your home safe.
At Beeksma Law, we stay up to date on the market so that we can provide our clients with the best advice. Our real estate team can help ensure that you are protected from potential risks. Contact us today to learn more about how we can help you protect your property rights.