As of 2022, title fraud in Canada has been on the rise. Between real estate transactions taking place virtually and home prices increasing all across the country, title fraud– as well as other forms of real estate fraud– has become a low-risk crime with a very high reward. In this article, we break down what title fraud is, how it happens, and how homeowners can protect themselves.

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Key Highlights

• Title fraud usually starts with identity theft, where fraudsters use stolen personal information to steal ownership of a mortgage and/or sell the property.
• Protecting your identity, working with licensed professionals, and acquiring title insurance are great ways to prevent title fraud.
• If you think you’re a victim of title fraud, make sure to keep records of all your communications and transactions and report the fraud to the right authorities. 

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What is home title fraud?

Title fraud is when a person steals the identity of a homeowner or forges their documents in order to take “legal possession” of their property. Once the person committing title fraud is in possession of the property title, they can sell the property or remortgage it without the actual owners finding out. In this way, title fraud can affect both homeowners and homebuyers, since victims will have to prove their ownership in court once they lose the rights to their mortgage. 

How does home title fraud happen?

Title fraud usually occurs through identity theft. This is because many types of government issued IDs can be used to access mortgage information or even apply for a mortgage, allowing fraudsters to steal ownership over a mortgage and/or sell their property. 

A common way title fraud takes place is through a rental property, where a tenant claims ownership over the home they are renting. Seniors are especially susceptible to this kind of title fraud.  

Types of real estate fraud in Canada

Besides title fraud, there exists other types of real estate fraud that Canadian homeowners should be aware of. 

Title fraud

As mentioned above, title usually starts with identity theft, where a fraudster gets a hold of a homeowner’s personal information and uses it to steal the title to their property. After that, it’s likely that the fraudster will either sell the home or apply for a new mortgage against it. 

Foreclosure fraud

Foreclosure fraud is a very predatory type of real estate fraud that targets homeowners who are struggling to make their monthly mortgage payments. In this case, fraudsters will approach the homeowner offering them a loan in exchange for the property title. Once they are in possession of the property title, they will keep the homeowner’s money and instead, sell or refinance the home. 

Mortgage fraud

Mortgage fraud is when you apply for a mortgage using falsified documents. Depending on whether or not you were tricked into providing the false information by someone else, you might be held liable and could have trouble getting a mortgage later. 

How to protect yourself from real estate title fraud

There are many steps homeowners and even future homeowners can take to protect themselves from real estate fraud. 

• Protect your identity. Since most real estate fraud starts with identity theft, protecting your identity is the most important way to avoid being a victim of fraud. Be careful who you share your personal information with, check your credit card statements and bank accounts regularly, and destroy documents containing personal information properly before throwing them away.
• Work with licensed and accredited professionals. When going through the mortgage process, make sure you are only working with well-known or well-researched lenders or mortgage professionals. 
• Contact your mortgage lender first. If you are struggling to make mortgage payments on time or are approached by a third party offering you help with your loan, always contact your mortgage lender first for professional advice. 
• Read through documents before signing them. This goes for any type of contract or document: always read through the entire document before signing your name. 
• Get title insurance. Title insurance will protect both homeowners and lenders from losses caused by title fraud. 

How to report title fraud to the Canadian Anti-Fraud Centre

If you suspect that you are a victim of title fraud, here are some steps you can take. 

• Write down and date all the steps you went through and when you noticed the fraudulent activity. Include names of everyone you spoke with and when you communicated with them. 
• Let your financial institution know that you are suspicious of fraud surrounding your accounts. 
• File a police report and contact your provincial land registry office to keep them informed. 
• Finally, contact one of Canada’s credit bureaus (TransUnion or Equifax) and ask them to put a fraud alert on your credit report.

Basically, letting these institutions know about potential fraud as fast as possible will help them help you prevent further fraudulent activity from taking place. 

You can also help by reporting the fraudulent activity to the Canadian Anti-fraud Centre. While it’s not their job to investigate the fraud, they act as a repository of fraud to help out the authorities. 

Frequently Asked Questions

Welcome to our Frequently-Asked Questions (FAQ) section, where we answer the most popular questions designed and crafted by our in-house mortgage experts to help you make informed mortgage financing decisions.

Final Thoughts

As title fraud becomes more and more common in Canada, it is incredibly important for homeowners and buyers to be aware of title fraud and learn how to protect themselves. As mentioned, there are many ways to prevent title fraud, including working with licensed and knowledgeable mortgage professionals.If you have any questions concerning your mortgage or about how to get a mortgage, contact nesto’s mortgage experts. They will be sure to guide you through the process and meet all your mortgage needs. 

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