Real estate fraud is a broad term used to describe the different types of fraud that the real estate industry faces. 

Mortgage fraud

Mortgage fraud is a type of real estate fraud that most often hurts the financial institutions that lend money for purchasing property.  The most common form of mortgage fraud involves fraudsters acquiring property and then artificially increasing the property’s value through a series of sales and resales between the fraudster and someone in cooperation with them.  A mortgage is then secured on the property based on the price that has been artificially inflated.

Title fraud

Title fraud is a different type of real estate fraud that most often hurts individual homeowners.  In comparison to the more than two million real estate transactions that occur each year in the province, there are a limited number of cases of title fraud.  The most common forms of title fraud involve fraudsters using stolen identities or forged documents to transfer a registered owner’s title to himself or herself without the registered owner’s knowledge.  The fraudster then obtains a mortgage on this property and once the funds are advanced on the mortgage, he or she disappears.  This type of fraud is also sometimes referred to as “mortgage fraud.”

Protect your property by protecting your identity

Ontario’s land registration system has a proven track record for security, accuracy and efficiency.  Property owners in this province can trust in a constantly improving system that has introduced automation, electronic registration and enhanced security to land registration.  The system is built on 200 years of legal and regulatory best practices, using the best technology currently available.

However, in any system, it is impossible to completely avoid fraud.  Ontario homeowners can take an active role in protecting their property by protecting themselves from identity thieves.  Fraudsters have been known to impersonate the owner of a property by obtaining false identification and then transferring property that does not belong to them.  To help avoid this situation:

• Always store personal information, including your birth certificate, Social Insurance Number card, bank account numbers and credit card details, in a secure place that others cannot access.
• Never carry your birth certificate or SIN card in your wallet.
• Shred documents, such as credit card statements, before you discard them.
• Never reply to spam or e-mails that ask for banking information, credit card details, passwords or other sensitive information involving property you own.
• Check references from prospective renters if you are renting your property and be sure to check on your rental property regularly.

Be alert to identity theft

Pay attention to the following in order to detect fraud early:

• Tax statements or bills are unexpectedly mailed to your home, addressed to a different individual.
• You receive a phone call from a caller inquiring about a new mortgage that has already been arranged for your property.
• Bills do not arrive as expected.
• Creditors contact you regarding purchases you did not make.
• There are discrepancies in your bank or credit card statements.

Power of attorney

Another way in which you can protect yourself is by being cautious when granting power of attorney.  Whenever you give another person a power of attorney that permits them to deal with your personal assets, you should consult with your lawyers or advisers regarding appropriate limitations.

Title insurance

Consumers can also talk to their lawyers and advisers about alternative methods of protection, including the benefits of purchasing title insurance.

Article produced by the Government of Ontario Canada.

This article is relevant for all countires around the world especially in a major area like Toronto real estate