Mortgage Basics #Featured articles
Mortgage Basics #Featured articles
What Is Title Fraud? Protect Yourself From Home Title Theft
Table of contents
Homeownership is one of the most significant financial investments you will make. However, an increasingly common type of real estate fraud can threaten your investment. Title fraud is rising and occurs when fraudsters use stolen identities and forged documents to transfer homeownership without the rightful owner’s consent. When the real homeowners discover the fraud, their property may have already been sold or mortgaged to someone else.
This guide will explore how title fraud works, the warning signs to watch out for, and the best ways to protect your most significant asset.
Key Takeaways
- Title fraud occurs when fraudsters steal a homeowner’s identity to take legal possession of their property.
- Victims of title fraud may face legal battles, financial losses, and potential eviction.
- Preventative measures like title insurance, identity protection, and careful monitoring of property records can reduce risk.
What Is Title Fraud?
Title fraud is the fraudulent transfer of property ownership from the rightful homeowner to someone else. If you own your home, you risk title fraud, especially if you are mortgage-free. Title fraud is committed without the rightful homeowner’s knowledge or consent.
Once fraudsters have transferred legal ownership of the property to them, they can either sell your property to an unsuspecting buyer, transfer the title to them or use the mortgage as collateral, allowing them to borrow a large sum of money against your home before disappearing and leaving you with a defaulted mortgage. Title fraud can impact both homeowners and homebuyers.
How Does Title Fraud Happen?
Title fraud starts with someone stealing your identity and impersonating you to forge documents to obtain the title and take legal possession of your property. Rental homes or homes where owners are away for extended periods are often easy targets for title fraud, as it typically takes these homeowners longer to discover that fraud has occurred.
Steps Fraudsters Take To Commit Title Fraud
- Stealing personal information – Criminals acquire a homeowner’s personal information through identity theft, phishing scams, or data breaches.
- Forging ownership documents – Fraudsters create fake property transfer documents and submit them to the land registry.
- Transferring ownership – They register themselves or an accomplice as the new property owner using falsified documents.
- Selling or refinancing the property – Once the title is in their name, they sell the home or take out a fraudulent mortgage.
- Disappearing with the money – The fraudsters vanish, leaving the actual homeowner with the financial burden and legal trouble of proving ownership of the property and transferring it back to their name.
Signs You May Be a Victim of Title Fraud
Being proactive can help prevent some severe consequences of home title theft. Watch out for these warning signs and take proactive measures if something appears out of the ordinary:
- Unexpected mortgage or loan statements for loans you didn’t take out arriving in the mail.
- You stop receiving property tax bills or utility notices as fraudsters may have changed the mailing address.
- A notice of ownership change appears in land registry records without your knowledge.
- You receive legal notices about a property sale or eviction when you haven’t sold your home.
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How to Protect Yourself From Title Fraud
Taking proactive steps can significantly reduce the risk of being a victim of title fraud. There are many steps homeowners and future homebuyers can take to protect themselves from title fraud before it occurs.
Purchase Title Insurance
Title insurance is one of the best protections against title fraud. It covers legal expenses, helps you through the legal process, and covers financial losses if someone fraudulently transfers your home’s title. Homeowners can purchase title insurance when closing or anytime after from a title insurance company for a one-time fee called a premium.
If you don’t have title insurance, you’ll be required to navigate the lengthy legal process of proving ownership and incur all costs associated with proving you’ve been a victim of fraud on your own.
Regularly Monitor Your Home’s Title
Check with your provincial land registry office to verify that your name remains listed as the rightful property owner. Many jurisdictions offer free online search tools for official land and property ownership records. This can help you monitor the title of your home and track any changes.
Safeguard Your Personal Information
Identity theft is a major contributor to title fraud. Protect your identity by shredding documents that contain sensitive or personally identifying information before disposing of them. Use strong, unique passwords for all online accounts. Be cautious of phishing scams that request personal details by phone or email.
Stay On Top of Your Mail and Property Tax Notices
Contact your service providers immediately if you suddenly stop receiving bills or property tax notifications. A fraudster may have redirected your mail to their address to commit fraud.
Work With Trusted Professionals
Always work with licensed real estate agents, mortgage professionals, and legal professionals when buying, selling, or refinancing a property. Fraudsters often pose as industry professionals to execute scams.
What to Do if You’re a Victim of Title Fraud
It’s crucial that you take immediate action if you suspect you may be a victim of title fraud.
- Contact your provincial or territorial land registry office where the affected property is registered to report the fraudulent title transfer.
- Notify your mortgage lender and bank about any unauthorized loans in your name or transactions you have not authorized, and place flags on your accounts.
- File a police report with your local police and provide law enforcement with all relevant documents and evidence. Obtain a file number that you can use for future reference and provide to your lender if needed.
- Place a fraud alert on your credit report by contacting Canada’s credit bureaus, Equifax and TransUnion, to monitor suspicious activity on your credit report.
- Report the fraud to the Canadian Anti-Fraud Centre.
Frequently Asked Questions
Is title fraud common in Canada?
While not as common as other types of fraud, title fraud cases have been rising, especially in major real estate markets like Toronto and Vancouver. Homeowners with significant home equity and a mortgage-free home are at a higher risk.
How much does title insurance cost?
Title insurance is a one-time payment, typically from $250 to $500 for residential properties, depending on the property value and insurer.
Can I recover my home if it’s fraudulently transferred?
Yes, but the legal process can be lengthy and costly unless you have title insurance. Acting quickly and having title insurance can help mitigate your financial losses.
Final Thoughts
Title fraud can cause homeowners and potential homebuyers financial and legal distress. To reduce your risk, you can protect yourself from this type of fraud by remaining vigilant, keeping your identity secure, working with trusted accredited mortgage professionals, and ensuring you have title insurance as a homeowner.
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