Home Title Fraud in Ontario: Prevention and What to Do

Home title fraud is when someone uses stolen personal information or forged documents to transfer your home into another name or to borrow money against it. Many owners only learn about it when a lender, a municipality or a buyer contacts them.

This article explains the warning signs, the Ontario rules that act as safeguards, and the practical steps to take if you think something is wrong. It is general information, not advice on your situation.

How the fraud generally works

A fraudster typically needs your identity details and a way to get a document accepted. The goal is either to sell the home to an innocent buyer, or to register a mortgage and take the loan money. The real owner often finds out only when payments stop or notices arrive.

Ontario's electronic land registration system has a built-in checkpoint. Only a lawyer may sign for completeness of a document that requires compliance with law statements, and most transfers of title contain such statements. Generally a transfer must be signed for completeness by two different lawyers, one acting for the transferor and one for the transferee.

Some transfers, such as those within a family or between related parties, may be completed by one lawyer acting for both sides under the Law Society's professional standards. That is one reason family-related transfers deserve extra care.

Warning signs to watch for

• Mail or calls from a lender about a mortgage you did not arrange.
• Mortgage statements, property tax bills or utility bills that suddenly stop arriving.
• A notice of default or power of sale on a mortgage you do not recognize.
• A tax arrears notice when you believed taxes were paid.
• Strangers visiting the property and saying they own it or have bought it.
• Unexpected contact from real estate agents or movers about your home.

Lender and municipal processes follow timelines. A lender may not give notice of power of sale until the default has continued for at least 15 days, and the sale cannot take place until at least 35 days after the notice is given. A municipal treasurer may register a tax arrears certificate if any part of the arrears is still owing on January 1 in the second year after the year the taxes became owing. If you receive either kind of notice and do not recognize the debt, do not wait.

Ways to reduce your risk

• Keep documents with your personal information (identification, tax papers, mortgage papers) locked up, and shred what you no longer need.
• Check that you receive your mortgage and property tax mail, and follow up when something is missing.
• If you are away for long periods or the home is vacant or rented, arrange for someone you trust to watch the mail and the property.
• Be careful about who you give a power of attorney to, and ask a lawyer to explain what it allows.
• Ask your lawyer what searches or protections are available when you buy, refinance or change how the home is held.

Powers of attorney deserve special mention because misuse can look like fraud. An attorney under a continuing power of attorney for property may do anything about the grantor's property that the grantor could do if capable, except make a will. The attorney can act right away unless the document says otherwise, or it may take effect on a specified date or contingency.

The document must be signed in the presence of two witnesses, and neither the attorney nor the attorney's spouse or partner can witness. An attorney is a fiduciary who must act diligently, honestly, with integrity and in good faith for the grantor's benefit.

If the home is a matrimonial home, no spouse may dispose of or encumber an interest in it unless the other spouse joins in or consents, or another listed exception applies.

If you think your title has been targeted

The right response depends on what was done: a transfer, a mortgage, or both. Because the facts vary, speak to a lawyer early. A lawyer can review the records for your property and advise on how to challenge a document.

If a court case is started that puts an interest in land in question, that case is not notice to outsiders until the court issues a certificate of pending litigation and it is registered on title. A court may discharge such a certificate in several cases, including where the party has no reasonable claim to the interest or can be adequately protected by other security. Whether this tool suits your situation is a question for your lawyer.

Do not assume that paying a lender solves a fraud problem. A borrower in default can get relief before a power of sale by paying the arrears plus the lender's necessary expenses, but that rule addresses a genuine mortgage default, not a mortgage you say you never signed.

Trust funds held by a lawyer for a closing are a separate concern. The Law Society's Compensation Fund typically pays for losses involving trust funds held for real estate closings, but it is a last resort, and the claimant must first try to recover the loss from the lawyer or paralegal and from any other sources.

What to do next

• Write down what you noticed, with dates, and keep every letter, email and envelope.
• Contact your bank or mortgage lender and tell them you did not authorize the activity.
• Report the identity theft to the police and keep the report number.
• Contact the municipality if tax notices look wrong.
• Speak to a real estate lawyer promptly about the records on your property and your options.
• Ask your lawyer whether your title insurance, if you have any, may apply.

Frequently asked questions