Title Fraud in Ontario: How It Happens and How Homeowners Can Protect Themselves

From time to time, Ontario homeowners discover that their property has been transferred or mortgaged without their knowledge. This is generally referred to as title fraud. Drawing on information published by the Government of Ontario and the Financial Services Regulatory Authority of Ontario (FSRA), this article outlines how title fraud generally works, steps homeowners may consider, and whom to contact if something appears wrong.

What Is Title Fraud?

According to the Government of Ontario, title fraud usually affects individual homeowners. It involves fraudsters using stolen identities or forged documents to transfer a registered owner's title to themselves or someone else without the owner's knowledge. The fraudster then obtains a mortgage on the property and disappears once the funds are advanced. FSRA describes title fraud in similar terms.

The government also notes that fraudsters have been known to impersonate property owners by obtaining false identification. It states that no registration system can completely avoid fraud, and that homeowners can take an active role in protecting their property by protecting themselves from identity theft.

The government distinguishes mortgage fraud, which usually affects lenders, from title fraud, which usually affects individual homeowners. This article focuses on the latter.

Situations That Call for Extra Attention

Government sources do not publish a list of "high-risk" properties. The following are general, common-sense reminders rather than legal conclusions. Owners may wish to be more attentive where:

• The owner lives outside Canada or rarely visits the property;
• The property is vacant or rented out, and mail sent to it is not regularly seen by the owner;
• The property has no mortgage, so the owner has little ongoing contact with a lender about it;
• The owner is elderly and relies on others for day-to-day affairs;
• Identity documents have been lost or stolen, or personal information has been exposed.

Steps Homeowners May Consider

Protect your identity

The government emphasizes protecting yourself from identity thieves. Keeping passports and driver's licences secure, sharing copies of identification only when necessary, and treating unsolicited calls, emails and texts with caution are basic precautions.

Watch property-related correspondence

Letters from banks, the municipality (such as property tax notices), insurers or unfamiliar law firms that do not match what you know, such as references to a loan you did not apply for, should be checked promptly. Owners who are away may arrange for someone they trust to collect and review mail sent to the property.

Check the title register from time to time

Title information in Ontario is recorded in the government-run land registration system. Owners can ask a lawyer to search the property and confirm that the registered owner and registered mortgages match their understanding. Government information also explains that only authorized account holders, such as lawyers, conveyancers and financial institutions, can submit documents in the Electronic Land Registration System.

Consider title insurance

According to FSRA, title insurance is a one-time-premium policy that may protect against a range of title-related losses, including title fraud. FSRA notes that title insurance is not a requirement in Ontario; existing homeowners can purchase it after the fact, although those policies differ from policies bought at the time of purchase; and some insurers offer extended coverage, such as identity theft, for an additional fee.

FSRA recommends reading the policy carefully, understanding what is covered and excluded, and discussing with a lawyer or insurer whether title insurance suits your situation. Our calculator gives a general sense of premiums.

Be careful with powers of attorney

A power of attorney can allow someone else to deal with your property, including real estate. Choose your attorney carefully and set out the scope of authority clearly. If you have signed a power of attorney you no longer need, ask a lawyer how it can be revoked.

Owners who live abroad

Owners who spend long periods outside Canada may consider having a trusted family member or professional check the property and collect mail regularly. Important property documents are best handled through a lawyer you know, rather than by sending identification and signed documents through unfamiliar agents or online channels.

Five Steps the Government Recommends If Something Seems Wrong

The Government of Ontario's page for victims of real estate fraud recommends acting quickly and taking these steps:

1. Report what happened to your local police;
2. Get advice from your lawyer or adviser;
3. Contact the Land Registry Office where the property is registered, and the Canadian Anti-Fraud Centre;
4. Speak with your bank;
5. Contact Canada's national credit-reporting agencies (Equifax Canada and TransUnion Canada) to request a free security freeze.

Compensation for Losses

According to the government, the Land Titles Assurance Fund was established under the Land Titles Act to compensate people for certain financial losses due to real estate fraud or errors and omissions in the land registration system. The official page states that applications must be made within 6 years of suffering the loss and must be an eligible type of claim, and that compensation may cover financial losses and reasonable legal and other costs related to the claim.

Owners with title insurance may also claim under their policy. FSRA recommends submitting a claim in writing as soon as possible and keeping a copy. How these routes interact in a particular case depends on the circumstances and is a matter to discuss with a lawyer.

When to Speak With a Lawyer

• You receive loan, registration or legal documents about your property that you do not recognize;
• You suspect the title register is wrong or that someone has used your identity;
• You will be away from Canada for long periods and want to arrange property management or a power of attorney;
• You are considering title insurance for a property you already own.

Frequently Asked Questions

Sources

• Government of Ontario: Victims of real estate fraud
• Government of Ontario: Compensation for loss from the Land Titles Assurance Fund
• Government of Ontario: Register your land documents
• FSRA: Understanding Title Insurance
• Canadian Anti-Fraud Centre