Title fraud occurs when a fraudster obtains your personal information, usually through identity theft, and transfers the title on your property to their possession. They then use it to take out loans against your home or fraudulently discharge your mortgage and sell the property to an unsuspecting new buyer for more money. Recently, mortgage-free Canadian seniors have been targeted in increasing numbers by perpetrators of title fraud.
Canadian seniors being targeted due to free and clear titles
If a property is mortgage-free and has been so for a number of years, it is more likely to be the target of title fraud. Seniors are an especially attractive demographic for fraudsters since they tend to live in isolation, may have medical issues which can diminish their capacity, and most importantly their mortgages are free of encumbrances that can diminish the value for a fraudster.
High-value neighbourhoods are also frequent targets, although this doesn’t discount middle-class neighbourhoods from being targets. A high-value neighbourhood that is desireable means that the fraudster can “sell” the house more quickly and easily, and often without the usual checks and balances that go along with a real estate transfer due to a buyer’s rush to snap up the property. Title fraud properties are often sold just at or under market value to encourage a fast sale.
Protecting yourself from title fraud
The easiest way to protect yourself against title fraud is to take the usual measures you would to protect yourself from identity theft. A fraudster needs your personal information in order to initiate a transfer of title. Just some of the measures you can take are:
• Locking your mailbox
• Buy title insurance that protects from potential future fraud
• Avoid using banking sites and transmitting private information in public spaces on WiFi (such as coffee shops and libraries)
• Putting mail in the glove box or hiding it away from windows in a vehicle
• Get annual credit reports to ensure that your identity hasn’t been stolen
For more measures to protect yourself from identity theft, see the Financial Consumer Agency of Canada’s website.
You can also purchase title insurance; some products, including this one, don’t just protect against title issues that have happened in the past, but fraud that may happen in the future. Most title insurance policies are only meant to protect the new homeowner when the title is being transferred, so ask your insurance broker if they have title insurance products that will protect your current home.
If you are a victim of a title fraud, you will usually receive a phone call or mail from various parties inquiring about the sale of your home or the loan that the fraudster has taken out. If you receive any suspicious calls of this nature, contact the police immediately. Most importantly, never sign any documents which refer to the title of your home without having them examined by a real estate lawyer.
Are you safe if you have a second mortgage?
Fraudsters will usually pass up properties with an encumbrance such as a reverse mortgage or a home equity line of credit – but not always. If the home is in an attractive neighbourhood where they can sell it quickly, they may take the risk.