How to protect yourself from Real Estate title fraud

How to protect yourself from Real Estate title fraud

Real estate title fraud has been a hot news topic lately.  There are multiple cases that have recently surfaced in the media where fraudsters have sold or tried to sell a property that belonged to unsuspecting homeowners.  The fraudsters did so by assuming the real homeowner’s identity.

The reality of the situation is that Real Estate title fraud is becoming a more frequent occurrence and fraudsters are getting increasingly sophisticated.  In this blog post, we will discuss how homeowners can protect themselves from real estate title fraud, share specific examples of fraud situations to be aware of, and how to potentially deter them.  It is very important to note that any of the measures we discuss are not guaranteed to prevent real estate fraud. However, with some diligence and awareness, they can be deterrents and can help you reduce the chances of becoming a victim of Real Estate title fraud.

Real Estate title fraud is a serious issue that can cause homeowners a great deal of stress and financial loss.  Most often, it occurs when a fraudster illegally obtains the title to a property, and then sells or mortgages the property without the homeowner’s knowledge.  Most commonly, this occurs when the fraudsters produce fake identification in order to assume the identity of the real homeowners.

The fraudsters will subsequently attempt to sell the property, either privately or using a Real Estate Agent.  In some cases, fraudsters will use the real homeowner’s identity and other credentials to apply for a mortgage on the property, only to pocket the proceeds from the new mortgage, leaving the legitimate homeowner on the hook for hundreds of thousands in debt and payments.

There are other types of Real Estate title fraud such as a fraudster obtaining a power of attorney from a vulnerable homeowner and selling their property without their knowledge, or even hackers hijacking the email of a party in the transaction (for example, the lawyer’s email) in order to ask unsuspecting homebuyers and sellers who are in the process of completing a Real Estate or Mortgage transaction to redirect funds the fraudster’s bank accounts, etc.

How can I protect myself from Real Estate fraud?

Get Title Insurance

Title insurance is an important tool for protecting homeowners and real estate professionals from the financial losses associated with title fraud.  Title insurance protects the homeowner or mortgage lender against financial losses resulting from defects in the title to a property. This includes losses that may occur because of fraud, forgery, or errors in public records.

Most title insurance policies typically provide coverage for losses that occur because of title fraud, including losses related to the sale or mortgage of a property without the homeowner’s knowledge or consent.  If a fraudster sells a property without the homeowner’s knowledge or consent, the title insurance policy may cover the homeowner’s financial losses and even handle the legal process to recover the title to a property.

Title insurance usually costs a one-time premium for a homeowner’s policy that may cover you against title fraud and other losses related to the title of your home.  Your property is covered for as long as you own it (there are no annual premiums to be paid).  A title insurance policy is usually purchased through your Real Estate Lawyer when you purchase the property.  If you do not have title insurance, you can purchase a policy at any time, however, your policy will not likely cover you for any issues or fraud that may have occurred prior to your purchase of the policy.

Keep an eye open for suspicious activities

It’s important to be vigilant about suspicious activity related to your property. Pay special attention to mail or phone calls about a mortgage or sale that you did not initiate.  If a fraudster applies for a mortgage on your property, the lender will likely run a credit check on you.  There are several free tools such as Borrowell or CreditKarma that help you monitor your credit and alert you of any suspicious activities.  These tools will usually alert you if a credit check has been performed on your credit bureau file.  While most credit inquiries may be legitimate, if you see a credit inquiry from a company or institution that you do not recognize, it can be a prompt to investigate further.

If you are renting or Airbnb‘ing your property, beware that some fraud cases involve would-be tenants or short-term renters, who rent a property, only to assume the homeowner’s identity and commit title fraud.  Therefore screening, interviewing, and physically meeting your tenants is always a good idea.

Don’t be afraid to ask prospective tenants for multiple pieces of ID and perform the necessary due diligence prior to signing a lease agreement and your new tenants moving in.  If you are short-term renting your property, only use platforms that you trust to list and facilitate your short-term rentals.

If you have a property that is going to be vacant for a prolonged period such as a rental or a recreational property, it is always a good idea to physically visit the property every few weeks while it is vacant.  When visiting the property, keep an eye open for any sign that your property may have been physically compromised or put up for sale without your knowledge.  The same applies to snowbirds who may leave their property vacant and spend months abroad.  If you plan to keep your property vacant for a prolonged period, it’s always a good idea to keep a close eye on it and have someone who can “check in” on your property often.

Another deterrent may be to periodically search your local MLS or Google for your property address.  If you suddenly see that your property has been listed for sale without your awareness, contact your local authorities.

Google Alerts is a tool that lets you set up a proactive Google search that will alert you when new results are found, for free.  If your property address is somewhat unique, you can set up alerts for all your properties and be notified by email as soon as new search results appear.  Since MLS listings for properties are usually advertised across the internet (such as on Realtor’s website or other aggregator websites).  Setting up a Google Alert takes only a few seconds and can proactively email you when a new Google search result for your property’s address appears.

Finally, if you suspect or know that your identity has been compromised in any way.  Maybe you’ve been part of a recent hack and have been notified by a company of such, or perhaps you have lost your wallet recently, it makes sense to keep a closer eye on the title of your property(ies).

If you suspect that someone may be trying to fraudulently sell or mortgage your property, contact your local police department immediately.

Have a mortgage or HELOC attached to your property

In some cases, fraudsters may target properties that are “free and clear”, meaning they don’t have a mortgage or any other collateral attached to them that may need to be discharged in the process of selling the property.  This may sound counterintuitive to every Canadian’s goal to own their home and pay off their mortgage but having a small home equity line of credit or a small mortgage balance on your property may act as a deterrent for real estate title fraudsters as it requires additional steps to discharge the mortgage.   As with any of the above tips, there is no guarantee whatsoever that this will prevent fraud, but it might deter fraudsters and encourage them to choose an “easier target”.

Search your title periodically

In most provinces, homeowners have a way to search for their property’s title with the land registry.  It is a good practice to perform at least annually, especially if you are not occupying the property.

This includes checking for any inaccuracies or errors in your name, address, or other personal information, as well as verifying that the property is still in your possession. In Ontario, you can access your home’s title for a nominal fee using Teranet’s Onland system.  For properties in British Columbia, you can search your property’s title online with the LTSA.  Other provinces may require a lawyer, notary, or agent to perform a title search.  Alternatively, your Real Estate Agent may have tools available to them to do the same.

Searching your title is unfortunately too little, too late.   Once fraudulent changes have been made to your property’s title, the onus is now on you, as the homeowner, to prove that you have been defrauded.  If you notice any discrepancies in your property’s title, contact your local land registry office immediately.  If you notice that your property has been registered in another name, or there is a mortgage registered from an institution you do not recognize, contact your local authorities for further advice.

The Bottom Line

In conclusion, real estate title fraud is a serious issue that can cause homeowners a great deal of stress and financial loss. By staying informed, being vigilant, and taking advantage of tools such as title insurance, credit monitoring, and other measures,  homeowners can take steps to deter from becoming victims of this type of fraud. Remember to regularly review your property’s title, be aware of suspicious activity related to your credit and identification, and make sure you have title insurance.  If you suspect that you may be a victim of real estate title fraud, contact your local police department immediately.

Important note: This article is not Legal Advice. No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice.

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