Title Fraud: 7 Ways To Protect Your Property
Did you know that if someone fraudulently sells your home in BC, the innocent buyer gets to keep it? 😲
Most people don’t.
You’d think that, with all the hoops you have to jump when you buy a property to secure your mortgage and register your title, it would be safe. You wouldn’t expect that fraudsters would be able to take out additional mortgages or sell your house without your knowledge.
In this scenario, you’d be left without a home or the equity you’ve built in it, be on the hook for your mortgage (plus any additional fraudulent mortgages), and face a lengthy legal process. It’s a literal nightmare situation.
You would be excused for thinking that your home insurance would protect you from this type of crime, known as title fraud, but sadly it won’t.
While the risk of these types of fraud is low, the rising cases in Ontario and a string of recent news articles are a concerning trend revealing that this could happen to anyone.
What is Title Fraud?
Title fraudsters are sophisticated and organized. Armed with knowledge of the homeownership system, they use fake identification to impersonate property owners, organize fraudulent mortgages, and in worst-case scenarios, sell the property.
How To Reduce Your Home’s Risk of Title Fraud
It’s essential homeowners take proactive steps to protect their properties to avoid headaches, heartbreak, and expensive legal fees.
Below I’ll share important steps you can take to secure your peace of mind (and home.)
1. Take Out Title Insurance
Title insurance is often confused with home insurance, but they are very different. While home insurance covers the structures you own, title insurance’s primary purpose is to protect your property’s ownership. It covers losses from with your title ownership and title risks like defects in the title or property that weren’t readily apparent such as:
- A secondary party owning a portion of the property
- Liens against the title
- Unregistered easements
- Improvements that violate by-laws that were made without proper approvals
- Unpaid property taxes
In addition to providing coverage for title defects, title insurance may also covers:
- Mortgage fraud – when someone steals your identity to get a mortgage. The additional mortgage will prevent you from selling or remortgaging your property.
- Transfer fraud – when the property is sold without the owner’s knowledge.
- Some legal fees and other costs associated with restoring the title (depending on the insurance plan.)
Title insurance will cover residential dwellings, condos, cottages, vacant land, cooperatives, and even leased land.
Unlike home insurance, title insurance is a low-cost, one-time fee rather than a monthly premium. The fee for properties under $1M is $150; for properties over $1M, it incrementally grows, making it a no-brainer given the low cost.
Like most insurance in BC, it’s not sold directly to the homeowner. Ordering Title Insurance requires legal services. Our team can organize title insurance for you whether you are currently buying or already own the property. You can email David here or call us directly at 604 685 7786.
2. Have a Current Mortgage on Your Property
Many properties affected by title fraud had “Clear Title,” meaning there was no mortgage on the property when the title searches were done as part of the sale.
Having an existing mortgage adds another layer of complexity to a property sale because the lender must get involved to ensure it’s paid out.
But wait, isn’t the goal of property ownership to own it outright? Why would I want a mortgage if I don’t need one?
Yes, and criminals look for the easiest targets, making a mortgage an additional hurdle for them, lowering your own risk.
If you are lucky enough to be mortgage-free, there are a couple of ways to mortgage your home without paying unwanted interest rates.
Home Equity Line of Credit (HELOC)
A HELOC is a line of credit secured by the property and will appear as a mortgage on the title. You can get one when you have equity available in your property up to 65% of the property’s market value.
Many people use their HELOCs to add value to properties for renovations or finance other investments. They have the added benefit of extra protection to your title.
Registering a Private Mortgage on your Title
Anyone can register a mortgage and/or pledge the equity in their property as collateral. You could also register a demand loan or non-interest mortgage on the property to tie up the equity. While a fraudster could discharge this mortgage, it’s an additional hurdle and protection, making you less of an easy target.
3. Get The Duplicate Indefeasible Title Certificate
While title insurance and mortgages reduce the risk of Title Fraud, there is greater protection for the property owner when you pull the Duplicate Indefeasible Title Certificate. You can get this duplicate of your title from the Land Title Office as long as there’s no mortgage change or right to purchase charge on it.
This option offers the most security for your title.
Once the Duplicate Indefeasible Title has been pulled, the title is frozen until the certificate has been returned. This makes it incredibly valuable (and hard to replace), so it must be stored properly. If you store it at home, you’ll risk theft, fire, and loss. I strongly recommend you use a safety deposit box.
4. Set Alerts for Your Property Address
Keep on top of new listings or mentions of your property on public websites with Google Alerts. You’ll get a notification when your address is mentioned somewhere online. Here’s how you set up alerts:
- Go to Google Alerts
- Create an alert for your property address
- Specify the frequency you would like to receive the alerts. In this case, I recommend “as-it-happens” to be quickly alerted if someone tries to list your property without your knowledge.
Google Alerts is imperfect and won’t monitor Airbnb or Craigslist. We, unfortunately, couldn’t find a service that monitors AirBNB. Craigslist has a search alert feature worth setting up, but its effectiveness will depend on whether the fraudsters use the address in the listing. Here is a useful article on how to set that up.
5. Regularly Monitor Your Credit Score For Identity Theft
Property fraud relies on someone stealing your identity, so it’s important to safeguard your personal information and monitor for suspicious activity on your credit report.
Some banks provide free reports and update scores monthly. Third-party services Borrowell (Equifax reports) and Credit Karma (Transunion reports) also have free monthly monitoring services. Alternatively, many paid service providers will actively monitor for identity theft.
Other steps you can take include:
- Keep your SIN safe by not using it as ID and only sharing it with authorized parties
- Verify whether an organization legally requires your SIN before providing it and offer alternative forms of ID
- Monitor billing cycles and report any missing or suspicious transactions
- Report lost or stolen credit/debit cards immediately
- Only carry necessary forms of ID
- Don’t write down or carry passwords with you
- Install internet security software to protect your computer and information
- Be cautious when providing personal information over email or the internet
- Take extra care when sharing information on social media platforms
Caution, care, and proactive behaviour are key when preventing and reacting to identify theft.
6. Protect Your Property When It’s Empty, or You Are Overseas
Fraudsters can take advantage of unattended properties to provide showings for prospective buyers. Here are some tips for ensuring its security if you will be leaving your property:
- Get to know your neighbours and ask them to let you know of any suspicious activity
- Install a security system with a 24/7 emergency response service from a security company
- Set up a Ring doorbell with a camera that notifies you when anyone is at the door
- Have someone regularly visit your home such as a friend, property management company, or hire a professional housesitter
- Avoid posting on social media that you are away from your home
- Use light timers or smart home technology to give the appearance that people are home
7. Take care when renting out your property
If you are renting your property out, one of the best ways to protect your property is by carefully screening potential tenants by verifying their identity, employment, rental history, and credit scores.
Make sure you also have a lease agreement and avoid cash payments, CashApp, and wire transfers, which scammers all prefer.
A good property management company will manage all of this for you and conduct regular inspections to check the property is being used and maintained as intended.
Finally, don’t have your mail sent to your rental property, as it may provide the information needed for identity theft.
Let’s Get Your Title Insurance Organized
I hope you’ve found the steps in this article helpful for protecting your title, identity, and property from fraudsters.
The next best step is to get the low-cost title insurance, which we can set up for you. If you don’t have a mortgage, you may also want to consider pulling the Duplicate Indefeasible Title.
To move forward on any of these options or ask any questions about what you see here, please get in touch now by calling 604 685 7786, filling in our contact form, or emailing David directly.