Lately, stories have popped up about how a slick scammer sold a home out from underneath an unsuspecting owner. This type of fraud is not new, but it seems to be getting more frequent. Fraudsters often collect data from mail intervention, unsecured emails, and phishing scams to steal a homeowner’s identity. In the past, this type of fraud usually involved credit cards. However, a few criminal organizations have now set their sights on real estate. Title theft isn’t easy to pull off, but the high price of homes in the GTA makes the reward very appealing to unscrupulous thieves. How is this possible, and how can you protect yourself?
How Fraud Happens
Real estate fraud is a form of identity theft where a fraudster uses stolen personal information or forgery to transfer ownership of a home to themselves. Once they’ve assumed your identity, they take out a mortgage in your name or refinance your property. Then they head into the sunset with large amounts of cash before anyone notices the theft.
Alternatively, your property could be sold to an unsuspecting buyer without you even knowing about it. Imagine getting an eviction notice after living in your home for many years! It is rare, but it can and does happen.
A skilled and reputable real estate agent can help protect you from all kinds of trouble when buying or selling a home. How do you find the right one? The posts below can help:
- Should You Choose Someone You Know as Your Real Estate Agent?
- Real Estate Concierge Service: Is it Right for You?
- 5 Benefits of Choosing a Solo Agent Over a Real Estate Team
How to Spot Potential Real Estate Fraud
One possible sign that fraud has taken place is that you start receiving mail addressed to someone you don’t know. One time could be a coincidence. But if it happens frequently, it may be time to have your property title checked.
Title fraud can happen to anyone, but vacant homes or properties where the owner is away for extended periods are particularly vulnerable. The new “owner” can live in the house for months before anyone notices.
When buying a house, it is the real estate agent’s responsibility to verify identity to ensure the seller is who they claim to be. However, real estate agents are human, and no one is infallible. It still pays to be vigilant yourself when searching for your new home.
Be careful of unlisted properties or if the “owner” or Realtor® appears overly eager for a fast sale. A fraudster knows that time is of the essence and will be anxious to close the deal and disappear before anyone notices anything amiss.
If you must vacate your home, try to make it appear occupied. Perhaps a friend could stay in the house, or a friendly neighbour can keep a watchful eye on things.
How to Protect Yourself and Your Loved Ones
Whether you’re buying, selling, or are a longtime homeowner, general security precautions can go a long way to protecting your title. You always want to guard your online passwords and personal information carefully. That means no more answering those Facebook quizzes asking where you grew up, the name of your first pet, your first school, or your mother’s maiden name!
Most importantly, having sufficient title insurance can safeguard against all kinds of real estate fraud. Without it, you will have to pay the cost of all legal proceedings to restore what’s rightfully yours.
What Is a Property Search and Do You Need One?
When buying or selling a home, one of the lawyer’s responsibilities is to conduct a title search. This pulls up details on who owns the property, detects mortgages and liens registered against the title, and anything else that might interfere with the transfer of ownership.
Have you owned your home for many years? You would probably never wake up thinking, “I should do a title search.” But the occasional check can protect you and provide peace of mind that what you believe is yours actually belongs to you.
What Is Title Insurance?
The prevalence of fraud is one of the reasons real estate agents and lawyers will recommend that you get title insurance. Though not legally required, this policy protects you for the duration of your ownership. It’s so important to guard against property losses that many mortgage lenders will request proof of title insurance before approving your loan.
Being insured provides protection against multiple defects in the title that prevent clear ownership, including:
- Existing liens from a previous owner’s unpaid debts, such as property taxes, utilities, and mortgages
- Disputes with neighbours over property boundaries
- Errors in land surveys or public records
Lastly, title insurance can protect you from real estate fraud, making it well worth the one-time fee.
Buying or selling real estate has practical, legal, and emotional challenges. The following resources will help you navigate any situation:
- Everything You Need to Know Before Selling Your First Home
- Everything You Need to Know About Land Transfer Taxes
- Changes to the Stress Test: What Buyers Need to Know
Do You Suspect Fraud? Here’s What to Do Immediately
If you think fraud may have occurred, here are some steps you can take to rectify the situation as quickly as possible:
- Conduct a new search on your property title. Your real estate lawyer can provide this service, but you can also do it on your own.
- If fraud is detected, write down everything you can remember and the names of those you have spoken to regarding your property or mortgage.
- File a police report immediately.
- Contact the Canadian Anti-Fraud Centre.
- Notify all financial institutions where you have accounts that may be affected.
- Sign up for credit monitoring with TransUnion and Equifax.
Realizing you or someone you love has been a victim of title fraud can be a terrifying experience. However, do not lose hope. With the help of a real estate lawyer and law enforcement, victims almost always reclaim their property title.
Do you have questions or need advice about the current real estate market in the GTA? We are standing by and happy to help, whether you are buying, selling, or searching for your next investment. Reach out to us at ana@asantos.ca or call 647-232-7317 for the answers you need.