How to protect yourself against title fraud

By: John Loeppky on August 29, 2023
Article image

In the current housing and rental markets, owning your own home signifies—most of the time—a life with at least one form of substantial stability. It could all go to pot, as the saying goes, but at least you know where you’re going to sleep at night and how much of an investment you’ve made in case you need to downsize.

However, there is one type of fraud that can seriously disrupt this idealised bliss: title fraud.

What is title fraud?

Title fraud happens when someone pretends to be the homeowner in order to sell the home or leverage a mortgage against it, or otherwise engage in a related financial transaction for personal gain. According to First Canadian Title, seniors are at particular risk of title fraud.

Title fraud has been in the news more and more lately as homeowners from across the country have fallen victim. According to the Government of Canada’s official guidance, because any criminal looking to perpetrate this type of fraud is going to need your personal information to be believable and bypass safety checks, an instance of title fraud is likely to be preceded by your identity being stolen.

In that case, one problem could quickly turn into two.

Antoinette Leung, the head of financial institutions and mortgage brokerage conduct at Canada’s Financial Services Regulatory Authority (FSRA), says that housing transactions are particularly vulnerable when it comes to fraud.
“Real estate transactions are completed through a complex and multi-stage process involving many different regulated professionals, including realtors, mortgage brokers or agents, lawyers, lenders and title insurers,” she says. “Unfortunately, fraud may be perpetrated at nearly any stage in this process. Any party involved in the real estate and mortgage process can knowingly or unknowingly facilitate fraud.”

How to avoid falling victim to title fraud

Title fraud can happen, but that doesn’t mean it will happen — especially if you’re careful. Leung says that there are multiple steps that homeowners can take to protect themselves.

Get title insurance

“Obtaining and understanding title insurance is an important step for consumers to protect themselves from title fraud,” says Leung.

Title insurance protects you with legal and monetary coverage in case the ownership of your home or property comes into dispute, for example, in the case of mortgage fraud where bad actors may have forged documents relating to your home.

Learn more: Don't overlook title insurance when buying a home

Vet your team and keep your documents safe

When it comes to enlisting the services of mortgage agents, brokers, and brokerages, you can’t be too careful about who you’re working with. Leung recommends cross-checking prospective brokers on the FSRA’s mortgage brokerage online database to make sure they’re licensed and trustworthy.

You should also do a land title or lien search on your property on your regional property records database, keep documents related to your legal affairs locked down (and properly dispose of sensitive documents related to your home), and to always make sure that you read and understand the contents of any documents thoroughly before you sign them.

Beware of door-to-door scam artists

One popular way that fraudsters will try to get personal information out of unsuspecting marks is by going door-to-door posing as hired contractors.

“Consumers should be aware of scams involving door-to-door solicitation of services offering home improvements or assistance to terminate home service/equipment contracts, such as water heaters.”
These schemes often include the perpetrators asking for your personal information under the guise of processing a legitimate transaction. With your details, title fraud can become that much easier to carry out.

What to do if you get defrauded

If you believe you’ve fallen victim to fraud, act quickly. The Government of Canada recommends writing down every detail of when you began to suspect fraud, including names of any agents, lawyers or brokers who may have been party to the fraud. You should also notify your financial institutions immediately, as well as the two credit bureaus in Canada, TransUnion and Equifax, to make sure they’re on fraud alert.

File a police report and contact your local land registry bureau. Lastly. check in with a regulatory authority, like the FSRA, if you believe that a broker was part of the fraudulent transaction.

“The enforcement team may recommend actions against licensees who are found to have been a party to a fraud,” says Leung. “Action may include licence conditions, licence revocation or suspension, imposing administrative monetary penalties and/or prosecution in the courts.”

Taking out a title insurance policy can protect you against damages in the case of this fraudulent activity, as well as pursuing legal avenues to right the situation. There are many ways for you to protect yourself and not find yourself in the news for having become victim to this costly form of crime.

Today’s lowest rates in

5-year variable
5-year fixed
Get a quote