Stealing Your Home From Underneath You - the Growing Problem of
Title Fraud
by Donna Lewczuk
Imagine this. A Canadian homeowner - a successful professional
with a lovely home in a nice neighbourhood - arrives home after
work one day to find a "For Sale" sign on his lawn. Imagining
that it may be a practical joke, he asks his wife if she's
unhappy with the house! But his wife has no idea why the sign is
there, or who put it up. It turns out that the couple are the
victims of title fraud - a crime that's on a worrisome rise here
in Canada.
How is it possible? While there are several variations on the
crime, the basics are usually the same. The fraudster will
target a home and falsify legal documents to create a convincing
paper trail to "prove" their ownership of the home. They then
proceed to mortgage the home and disappear with the money.
Often, the rightful owners will have no idea what's going on
until a financial institution tracks them down to demand
payments on a loan they never knew existed. In some cases, the
fraudsters have actually stolen their identity: an especially
difficult twist for the homeowner, who must also clear his/her
name.
The easy access to electronic data -- on both people and
property -- may be contributing to the rise in title fraud,
which is costing homeowners and financial institutions millions
of dollars each year. And though it's a serious challenge to the
lenders, it can be financially devastating to the homeowner.
Fortunately, Canadians have access to some protection against
title fraud. A growing number of Canadian homeowners are
purchasing "title insurance": a product that offers some
specific protections against title fraud and other potential
pitfalls:
· A new survey shows a minor zoning violation that will require
a variance - a process that will delay the close of the sale.
Title insurance may allow the sale to close on time.
· Several months after moving in, a new owner discovers that the
heating ducts were cut off in an amateur renovation, done
without permits. Title insurance could cover the cost of the
repair and related expenses.
· An older property has the lenders worried: though there's no
evidence of any problem, there is no survey for the property,
and no record of permits for water or septic. Title insurance
may provide lenders with the confidence to proceed with the
mortgage.
Not surprising, title insurance is gaining support among both
lenders and lawyers, who see the value of this kind of increased
homeowner protection. Although some protection exists through
your lawyer's "errors and omissions" insurance - and the Land
Registry has an assurance fund in place that may be helpful -
homeowners have learned the hard way that accessing these monies
can take time, legal hire, and money (potentially a lot) on
their part. On the other hand, title insurance - available at a
modest, one-time cost - gives you immediate payout on a wide
range of title problems. Best of all, title protection insurance
is not limited to new purchasers only - it's now available to
current homeowners as well.
In case you're wondering, the couple in the story above - which
is based on one of the case files of Canada's leading title
insurance company - did eventually regain title to their house.
But it's a cautionary tale. Next time you make any changes to
your mortgage, make sure to inquire about title insurance.
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