Is your house Really to you ? Certainly, it is your furniture that furnishes the rooms, and you have the key to the front door. But is it still your name that appears on the title deed?
This document, which identifies the legitimate owner of a residence, is increasingly targeted by fraudsters who want to carry out “house thefts”. In 2020, suspicious residential transactions worth $96 million were uncovered in Canada by Ontario-headquartered insurance giant FCT. In 2022, it was $350 million, an increase of 264%. A wave of cases has also makes the headlines in the winter of 2023, after about thirty residences had been the target of such a scam in Toronto.
This type of real estate fraud consists in stealing your identity, pretending to be you at the bank and at the notary, in order to sell your residence without your knowledge. The thieves disappear with the money from the transaction, the name of the new buyer – which is not necessarily colluding with the fraudsters – replaces yours on the title deed, and you only discover the pot of roses the day a moving truck arrives at your house.
Another possibility is that the fraudster takes out a mortgage on your home in your name. You’re still the owner, but you’ll be responsible for the new loan…which you’ll find out the day the creditor knocks on your door to find out why you’re not making your payments.
Unlike a fraudulent transaction on your credit card, it is not enough to call the bank for everything to be settled. In order to recover your title to the property or get out of a mortgage taken out in your name, you will need to undertake legal procedures. And until the deal is done, you can’t sell or remortgage your home.
If this scares you, know that the phenomenon, even growing, “remains quite marginal”, specifies Raphaëlle Olivier, notary at the firm Lambert & Olivier. Above all, there are two simple methods that can reduce the risks.
Keep your mortgage
“Fraudsters are more likely to target properties that are free of mortgages,” says Raphaëlle Olivier. This allows them in particular to pocket a better profit at the time of the sale. A tip to protect yourself is to keep a mortgage on your house!
Rest assured, the idea is not to pay interest forever. The mortgage, remember, is the guarantee that you offer to the bank in exchange for the loan. When the latter is repaid in full, “you have to do what is called a receipt to publish it in the land register and cancel the mortgage”, explains the notary. However, you don’t have to; the mortgage simply continues to secure the loan, which is now zero dollars. And if a fraudster checks the land registry — which anyone can do — they’ll see that there’s a mortgage on your house and maybe move on to another target.
In the event that the thief decides to attack your property despite everything, the notary in charge of the transaction will contact your bank to proceed with the receipt. Good practice would require your financial institution to validate everything with you, “which provides an additional measure of control”, says Raphaëlle Olivier.
You will have understood it by reading the words “maybe” and “good practices”: this trick is not infallible. “It is impossible to protect yourself completely against real estate fraud,” says Sylvie Dionne, notary and director of residential solutions at the insurer FCT. However, you can avoid paying the consequences with the following method.
Insure your property
A good way to protect your title is to get… title insurance. The latter covers several types of problems that can arise with your building, in particular those related to the certificate of location (for example if your shed encroaches on the Hydro-Québec easement) and, of course, real estate fraud.
Like any insurance, this protection does not prevent the problem from occurring, but picks up the damage afterwards. In the case of a house theft, “we take care of the work and the costs that it takes, by hiring investigators, retaining the services of a lawyer and even going to court so that you don’t have to do it, explains Sylvie Dionne. The insured has no deductible to pay”.
Unlike the monthly or annual payment for home insurance, title insurance is settled in a single payment. The cost varies from one residence to another – in the case of a house of 500,000 dollars or less, it will be “between 100 and 350 dollars”, says Sylvie Dionne. Then, “your protection will last as long as you or your heirs have an interest in the property”.
Title insurance can be contracted directly with the notary at the time of purchase of the residence. It’s sometimes even a requirement of the mortgage lender, so you may have one without even remembering it – it’s a sum that goes almost unnoticed in the total cost of a real estate transaction! Check your papers.
If you already own, you can purchase title insurance from a title insurance company such as Stewart Title, Chicago Title or FCT, or from an insurance brokerage firm.
Note, however, that if you take out title insurance for a building that you already own, certain protections “will not apply”, specifies notary Raphaëlle Olivier. “In an ideal world, it would be better to obtain it when buying the residence. “It is even sometimes possible to have it paid by the seller.
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2023-07-21 16:00:16
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