Chicago Title Insurance Company did not have a single record of total title fraud, in which criminals impersonate a homeowner to sell a property, between the firm’s founding in the sixties and 2019. But now, the company is dealing with more than 30 claims in the GTA and Metro Vancouver, according to John Rider, its senior vice-president.
Indeed, Toronto police have reported multiple cases of title fraud in the past month, including one woman who had fraudsters gain access to her condo while she was living in China and sell it, while impersonating her, for $970,000. In another case, a couple working in the U.K. learned from their property manager that strangers were living in their Toronto home, unaware that they had purchased it from impersonators.
Impersonators posing as homeowners linked to 32 fraud cases in Ontario and B.C.
Lawyers, insurance companies and the Ontario Real Estate Association are calling on governments to better respond to this form of organized crime and are advising consumers to protect themselves by purchasing title insurance. They say criminals previously didn’t bother with this form of crime because of existing checks and balances, but massive gains in real estate values have made title fraud a lucrative scam.
Brian King, an investigator with King International Advisory Group who examines these kinds of crimes, says title fraud used to be almost non-existent before the pandemic. Now he receives reports of titles being fraudulently transferred as often as three times a week, with most occurrences in the Greater Toronto Area or nearby cities such as Kitchener and Barrie.
Mr. King says title fraud involves a team of criminals who surveil victims, forge their ID cards, open fake bank accounts and eventually impersonate them in dealing with real estate agents, lawyers and financial service providers. They often target homes that have been vacant for some time, as well as homes that have small or no mortgage balances so they can maximize their profits when a sale is made.
“Some of these people that are impersonating homeowners should be getting Emmys – they’re good actors,” said Mr. King, adding that the impersonators are generally not the masterminds, but receive thousands or tens of thousands of dollars for their roles.
He says the current level of exploitation of the country’s real estate systems could potentially lead to insurers limiting their coverage under fraud insurance or excluding fraud claims from title insurance entirely (title insurance, which can be bought by either a homeowner or buyer, also covers other issues regarding titles, including land survey mistakes and bylaw compliance matters).
“I have concerns that we would have to start limiting our coverage to the industry, and if that happens it would fall completely to consumers, lenders and brokers,” said Mr. Rider, who added that his company has approximately 20 per cent of the market share of title insurance in Canada.
One suggestion is to make multifactor-identification processes – in which someone’s bank accounts, cellphone number and ID are all being checked to confirm their identity – a standard part of real estate transactions. Mr. Rider said it’s hard to believe but the current system relies on two pieces of plastic ID that can be easily forged.
Daniela DeTommaso, the president of the FCT Insurance Company, says the government should introduce harsher penalties and an addition to the Criminal Code to specifically address mortgage fraud and deter criminals.
“The people or groups who are committing these crimes need to face appropriate consequences – and those thinking about committing these crimes need to know they can and will be punished,” said Ms. DeTommaso in a written statement.
Antonio Simoes, a lawyer with the Deer Lake Law Group in Burnaby, B.C., says buyers who purchase a home from fraudulent sellers have the most to lose without title insurance, as the home will eventually have to be returned to its rightful owner.
However, Mr. King says the crime can also be extremely costly and invasive for the rightful homeowner as well. In one instance he recalled, a couple returned home to find that their house had been sold by fraudsters and that the buyers had already renovated the home and sold off some of the original owners’ possessions, including furniture.
Tim Hudak, the CEO of the Ontario Real Estate Association, says the relative novelty of title fraud means it can be difficult to prevent.
“Ultimately, it’s up to us to work with law enforcement to try and stay ahead of the criminals as much as possible and best understand how they’re targeting people and getting past checks and balances that in the past have served us so well,” Mr. Hudak said.
The Ontario Ministry of Public and Business Service Delivery said changes are coming to legislation that governs real estate workers to better protect consumers and add provisions specifically related to fraud.
Real estate lawyers say Canadians should protect themselves through title insurance, which can often be obtained for $1,000 and only requires a one-time payment.
Mr. Rider said title insurance has only come into vogue in the past 20 years, so people living in a house they bought in the nineties or early 2000s should make sure they’re covered.
With a report from The Canadian Press
Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.