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By Karen L. Decker
For most people, the purchase of a home is the single biggest investment they will make. And yet, unlike many smaller assets such as cars or household belongings, many of us do not adequately protect our investment in our home from theft.
Theft of a home? Yes, it does occur! Of course, this is not theft in the physical sense, but rather in the legal sense.
Legal ownership in property is evidenced by the title to the property being placed into your name. You obtain title when the vendor of the property signs a deed transferring the ownership of the property. Once this occurs the government land registration records will reflect you as the owner and anyone searching those records will recognize you as the owner.
In the past few years an increase has been observed in the amount of real estate title fraud (i.e., title theft) occurring in Ontario, particularly in the Greater Toronto Area.
A typical example of this title fraud occurs when a fraud artist forges the signature of the true owner on a deed to himself. This forgery is possible by the relative ease in which fake identification documents may be obtained. The title to the property is thereby transferred into the name of the fraud artist or the fake name he/she chooses to use. The fraud artist may also forge the signature of a bank official to discharge the legitimate owner’s mortgage from the property. As a result, the government land registration records will show that the fraud artist owns the property and has no mortgages against the title.
The final step in this fraud occurs when the fraud artist goes to a bank and obtains a mortgage that is then registered against the property. The lawyer acting for the bank conducts a title search of the government land registration records and, of course, the fraud artist is shown as the owner. The bank relies on these records and advances mortgage funds to the fraud artist, who promptly disappears. The legitimate owner of the property has no idea that all of this is occurring. When the fraud artist eventually defaults on his/her mortgage payments, the lender will serve notice that it intends to sell the property. This scheme is only revealed to the legitimate owner when they receive the notice that the lender is trying to sell their property.
So, what happens to the legitimate owner? In a recent case, the Ontario Superior Court of Justice held that notwithstanding that the legitimate owner had no involvement in the fraud, the lender had a valid mortgage and still had the right to sell the property without any compensation to the legitimate owner. The legitimate owner also had to spend a considerable amount of money for legal fees in this case.
What can you do to protect yourself? Protection against losses resulting from this type of title fraud, including legal fees, is now available to homeowners through the purchase of a title insurance policy.
While title insurance was once only available to homeowners at the time of purchase, it is now available to existing homeowners through Stewart Title Guaranty Company’s Existing Homeowner Title Insurance Policy. For a low one time only premium (generally, between $100 to $200) a homeowner can purchase a policy that provides a broad range of coverage, including protection against losses resulting from real estate title fraud. The policy coverage lasts for as long as the homeowner owns their home.
To obtain the peace of mind offered by an Existing Homeowner Policy, a homeowner should contact their lawyer who can arrange to obtain a policy directly from Stewart Title Guaranty Company.
Karen L. Decker is Vice President, Underwriting for Stewart Title Guaranty Company. Ms. Decker is a graduate of Osgoode Hall Law School and was called to the bar in 1997.
To receive more information about title insurance or the Existing Homeowner Policy, please contact Stewart Title Guaranty Company at 1-888-667-5151.