How does mortgage or title fraud happen, and what protects me against it?

How title fraud typically happens

The most common pattern involves someone impersonating a property owner, usually one with no mortgage or significant equity, using forged or stolen identification to either sell the property or register a new mortgage against it without the real owner's knowledge. Fraud of this kind is a criminal offence under the Criminal Code and is investigated as such, separately from any civil claim to fix the title.

Vacant properties, rental properties the owner does not regularly visit, and properties with no existing mortgage are disproportionately targeted, since there is less routine contact to reveal the fraud early.

What a lawyer's identity checks are meant to catch

Lawyers acting on a sale or a mortgage are required to verify the identity of the person they are dealing with using government-issued identification and, increasingly, additional verification steps, precisely because this checkpoint is where impersonation fraud is often caught or prevented. This obligation exists whether the transaction looks unusual or not; it is a routine, required step on every file.

Ontario's electronic land registration system, which requires a lawyer to certify certain facts on registration, adds a further layer, though it does not make fraud impossible.

Where title insurance fits in

Title insurance is a private insurance product, not a government program, that can compensate an owner or a lender for losses from certain title defects, including some fraud, depending on the policy's specific terms and exclusions. It is not a substitute for the identity checks and registration safeguards described above; it responds after a loss rather than preventing the fraud itself.

Whether a specific fraud scenario is covered depends on the policy wording, so read what is and is not included rather than assuming.

If you suspect fraud

An owner who discovers an unauthorized mortgage or transfer against their property should contact a lawyer and the police promptly, since both a civil process to correct title and a criminal investigation may run alongside each other. Ontario's financial services regulator also accepts reports where a licensed mortgage broker or agent may have been involved in facilitating a fraudulent transaction.

Speed matters: the longer a fraudulent registration stands, the more complicated it can become to unwind, particularly if the property has since been resold or refinanced again.