Recent figures indicate a rise in title fraud cases in Ontario. Fraudsters are increasingly using the latest technologies and AI to forge high-quality fake title and identity documents to trick the victims. With the victims waiving due diligence and proceeding with the transaction without getting everything vetted by a qualified real estate lawyer, many of them fall prey to such fraudulent activities. Such cases typically fall into two categories.
Ownership fraud:
The fraudster cleverly fakes all the identity and title documents to convince the buyer that the property indeed belongs to them. Once the transaction is complete, they disappear without a trace with the funds.
Mortgage fraud:
Here, the culprit convinces a bank or a financial institution that they own a piece of property. Once they receive the mortgage amount, they disappear, leaving the real owner to deal with the loan.
Legal implications:
Such fraudulent transactions could lead to serious legal ramifications for all parties involved.
- The true owner of the property might have to reclaim their ownership of the title through prolonged legal proceedings.
- The innocent buyer, who fell for the fraud, might be evicted from the home they bought with no real possibility of recovering their savings.
- The lender might have no recourse to recover the loan amount in such cases.
It is very difficult to trace the culprits and recover the money once the transaction is complete. Therefore, it is vital to take all necessary precautions to ensure you are engaging in a genuine real estate transaction before transferring the funds.
How to protect yourself from such real estate fraud?
Always deal with licensed real estate agents, brokers, and dealers
Make sure that you are dealing with a licensed real estate agent or broker. One way to check the licensing details of the real estate agent you are dealing with is to visit the official website of the Canadian Real Estate Association (CREA).
Never waive due diligence
It is the responsibility of the buyer to verify the details of the property they are purchasing before transferring the funds. Often, in a hurry to secure the property before it becomes unavailable, the unwitting buyer might waive due diligence and document verification and transfer the funds to the culprit.
Apply for title insurance
Title insurance gives you financial protection against certain risks related to the title or ownership of the property. Such policies generally cover unforeseen title defects, encumbrances and liens on the property, encroachment and easement issues, zoning violations, building permit or work order issues, and identity theft or fraud. However, known title defects, environmental hazards, native land claims or government rights over the land, and zoning violations caused by renovations or changes are generally not covered.
Engage the services of a real estate lawyer
One way to avoid falling prey to such real estate fraud is to engage the services of a qualified real estate lawyer from the beginning and follow their advice throughout. Your lawyer will advise you on a suitable title insurance policy and conduct the necessary due diligence, title search, and document verification to confirm that everything is in order before the closing.
Importance of having an experienced lawyer in your corner
Due diligence
An experienced real estate lawyer will conduct thorough due diligence and document verification to make sure that there are no hidden liabilities or expensive pitfalls. Our real estate lawyers can help you uncover any title defects, encumbrances, or liens on the property and take steps to protect your investment throughout. We will check to ensure that there are no open building permits and that the property complies with all the required zoning bylaws and environmental site assessments.
Title Search
A title search is done to check the ownership and mortgage records on the property title. This helps in establishing the actual legal ownership of the property and in uncovering any liens, encumbrances, mortgages, or claims against the property. Our experienced real estate lawyers can help you with the title search and advise you on the best course of action if any major issues are identified before the closing.
Title insurance
As already mentioned, a title insurance policy will protect you from potential risks associated with the property title and ownership, such as unforeseen title defects, encumbrances and liens on the property, zoning violations, building permit or work order issues, encroachment and easement issues, and identity theft or fraud. Our lawyers can advise on choosing a policy most suited to your requirements.
Final verification of documents and fund transfer before closing
It will be up to the lawyer to verify all the documents before closing and to facilitate the final transfer of funds after verification. Also, in provinces like Ontario, you can only register the title transfer in the land registry system through a licensed lawyer. This ensures that the transfer is legally sound, properly verified, and documented.
Concerned About Your Property Transaction?
If you are worried about protecting your real estate transactions from such fraudulent activities, reach out to our real estate lawyers today for guidance and assistance. At Nanda & Associate Lawyers, our real estate lawyers have successfully helped numerous clients with their real estate transactions, handling everything from drafting the agreement to facilitating the closing. If you are planning to buy or sell a real estate property, get tailored legal guidance from our experienced real estate lawyers to protect your investment.
Protect your real estate investment today by reaching out to our legal team for a consultation.
