5 Things to Know

By Mark Weisleder

You’re no doubt familiar with the line, “Who’s been sleeping in my bed?”, as told in the children’s story Goldilocks and the Three Bears. Now imagine how you would feel if you returned from an extended stay overseas to find that someone actually was sleeping in your bed and living in your house…and that they had taken over the title to your home, as well. This is exactly what happened to one Toronto couple earlier this year. 

Let’s look closer and review five things homeowners should know about title fraud.

1. How did this title fraud happen?

Imposters targeted a vacant home with no mortgage on title. Using accomplices with fake IDs as tenants, they created phony identification papers and hired a real estate agent to sell the home. The sale was completed through two lawyer’s 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 to be returned to the original owner. If the innocent buyers have a title insurance policy, they will be compensated for all of their losses. Unless the original owner has title insurance, they will have to pay substantial legal fees, even if they win.

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, as in this case, you are also protected from: 

property taxes left unpaid by the seller 

condo liens or water arrears that arise after closing 

issues related to work done by a previous owner without proper permits that you are now being forced to remove 

being forced to remove encroachments from your property onto your neighbour’s property that weren’t apparent on closing because there was no survey 

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 title insurance premium cost is approximately
$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. Note that this is a one-time purchase that will last as long as you own the home.

5. How do I prevent this from happening to me, besides title insurance?

If you rent out your home, have a proper ID and verification check done on all tenants, to ensure they are not part of some 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, whether you borrow any money or not. Unfortunately, this is not foolproof because fraudsters are willing to pay off mortgages or fraudulently discharge mortgages. Be aware that the title insurance companies, law societies, and real estate regulators are putting in place extra system checks 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 mark@realestatelawyers.ca or toll free at 1-888-876-5529