Fred Weekley knew something was amiss when he received a fax from a title transfer firm wanting a land description of his home on Katepwa Lake, Sask., about 100 kilometres east of Regina. The mayor of the district of Katepwa Beach called the Vancouver-based company and was told the house had been sold and the title was about to be transferred to its new owner. The catch? He’d never put his home on the market.
He was about to be duped. Weekley was just lucky he caught it in time before the transfer went through.
“You can very easily be in real trouble,” says Weekley, a former senior financial planner. “You don’t even know what’s happened until the truck pulls up with the new owner’s stuff. It can be really, really disastrous.
“To me it appeared to be a ‘big city’ problem, particularly where there are hot real estate markets,” he adds. “Now I know that the title fraud can happen anywhere and to anyone.”
An all-too common scam
Title fraud is becoming increasingly common. According to title-insurance company FCT (First Canadian Title), estimates of damages in Canada range from $400 million to $1.5 billion every year. In 2013 alone, the firm declined to insure a mortgage twice a week on average based on the suspicion of fraud; the average mortgage was $360,000.
Toronto, Calgary, Vancouver and Montreal have higher rates of fraud, according to FCT’s Retire Your Home website. Targets are typically seniors who have paid off their homes.
It happened to New York resident Jennifer Merin, who recently found herself fighting to get her vacant Queens-area home back from squatters who filed a false deed and moved in. A spike in her water bill last February alerted her to illegal occupants, and when she went to the house she found the locks had been changed. The fraudster allegedly filed a deed transfer in March listing himself as the owner and using a fake name for the previous owner.
“The deed was registered by the city shortly after the ‘owner’ who was the ostensible signor on the false deed died,” Merin says. “Looking online I discovered very quickly where my name had been listed as the owner there was another name registered as the owner of the house.”
It took months of legal action and thousands of dollars to get her house back.
How does it happen?
Title fraud can happen in one of two ways, according to the Financial Consumer Agency of Canada. With identity theft, fraudsters can use stolen or fake identification or documents to pretend to be a homeowner and obtain one or more mortgages on the property, then walk away with the cash.
Fraudsters can also register forged documents to discharge any existing mortgages then transfer the property to themselves and register a new mortgage against the property’s clear title, pocketing the proceeds.
“We have been tracking and reporting trends in real estate fraud for many years and last year we noted an increasing number of frauds against older homeowners,” says Lori Sartor, FCT vice president of residential solutions.
“Over the last number of years it has become more common. Unfortunately, fraudsters have been successful in some cases, and they’re getting smarter. When we see fraud, whether it’s with seniors or not, some of them are very, very intricate and quite well thought out with multiple parties involved.”
Long-standing titles are more easily abused than those with recent or frequent title activity, says Graham Webb, staff litigation lawyer at the Toronto-based Advocacy Centre for the Elderly.
“The existence of a charge, mortgage or other registered encumbrance on real property diminishes the value of the asset and makes it a less desirable object of financial abuse,” Webb says.
“Furthermore, the placement or renewal of a mortgage is likely to trigger the discovery of a fraudulent transaction, and the existence of an encumbrance may be enough of a deterrent to prevent abuse in the first place. The high incidence of mortgage-free real property ownership makes older adults a goldmine for those who are prone to commit financial abuse.”
Title fraud can be hard to prevent, but ways to avoid it include never signing documents you don’t understand or when you’re feeling pressured. The Financial Consumer Agency of Canada suggests checking with your provincial land registry office to ensure that the title of your home is in your name and reviewing your credit report regularly to make sure the information is correct. Purchasing title insurance is also worth considering.
The FCAC urges anyone who’s a victim of real estate fraud to contact the Canadian Anti-Fraud Centre), the police, the country’s two credit-reporting agencies (Equifax and TransUnion) your bank, and your provincial land registry office.