In January 2023, several high-profile cases were uncovered that exposed illegal activity, known as title fraud.
The scammers go to the bank, impersonate the homeowner, wanting to borrow money against the house, they get approved, register the mortgage, and then take the money. While the homeowner isn’t displaced, when they go to sell their home, or check title for refinancing, they can see that a mortgage has been put on the property.
Properties with no mortgage or any debt associated with a property are perfect targets. It results in a quicker transaction as sophisticated scammers can transact online.
Rest assured, there are tips to ensure you stay protected from title fraud.
#1 Get title insurance. Personally, I don’t know any real estate lawyers who do not close the transaction without title insurance. This protects property owners and their lenders against losses related to the properties, title or ownership. This policy will cover you for any actual losses and, most importantly, typically contain a defence of title provision, requiring the insurance company to defend, or restore, your title. You can, in fact, still purchase the insurance after you have bought the home. Well, this may sound easy, there are legal repercussions if you are the victim of title fraud. Not just the legal fees, but years of battling it out. After title fraud has been committed, the buyer or lender will want their money back or continue to pursue the transaction, causing a legal headache. That’s why there are other helpful tips to ensure is difficult for fraudsters to make the illegal transaction in the first place.
#2 Ensure you have ‘debt’ on your house. Scammers are less apt to commit title fraud if you have a mortgage or other forms of debt. Having a line of credit, even if it’s paid off, is good to leave on title, even if you don’t need the money. Seeing a debt is a deterrent to scammers.
#3 Check your tenants. Houses with tenants or rented out for AirBnBs are also targets for scammers. If a home is tenanted, this means that the owners are away, or don’t live in the property itself. Having a property management company in place while you are away from your home is a good system to have in place. Scammers need access to the property to commit the fraudulent activity.
#4 Protect your identity. Shred, shred, shred and don’t throw any personal financial documents or property tax documents away in the trash. Scammers will look through your garbage to find this information. Guard personal information and passwords and constantly review bank statements, utility bills, and credit card statements.
Due to Covid, and more transactions being done digitally, both realtors and lawyers will be triple checking identification, asking for a copy of their tax return and property tax notices just show that the homeowner lives in the property. Due diligence has been lost in the pandemic, we need to be on high alert and be diligent. I am Jen and I sell homes. #EducatingSellers #EducatingBuyers #OakvilleRealtor