Fraud Prevention Tip

fraud prevention in land titlesOctober was cyber security month, which got us thinking about fraud and how it can pertain to real estate transactions.There are people who consider real estate commissions to be an added and unncessary cost, and who would prefer to sell their home through a private sale. Working with an experienced real estate agent is the easiest way to notice any unusual activity in your transaction. Because these transactions are familiar to us, it’s easier to spot read flags that could be trouble.Here are a few examples of how identity theft can be a threat to home owners and potential buyers.

If the identity of a legitimate property owner is stolen, the fraudster may gain access to financial and personal information. Pretending they are the homeowner, they can list the property for sale and even pose as the owners to potential buyers. The buyer is not expecting any fraudulent activity and so obtains the financing they need to purchase the home. Once they’ve moved in, they later face the cost and stress of defending their right of ownership to the legitimate owners. Not only is that bad news for the buyer who has obtained the financing, but the legitimate owner may also be subject to the debt of the new mortgages that have been added to the land title. Both are stuck with legal bills to defend the damages resulting from the fraud.

Another circumstance of real estate fraud includes using a stolen identity to obtain financing against the equity of a property, rather than trying to sell it. This can involve including an accomplice to impersonate a spouse. It’s important to monitor your statements each month to ensure that you’re fully aware of all transactions that affect your home and title. Though not as common, there are those who pose as professionals committing fraud as well. While the title to the property may have been transferred to the purchaser, it is still bound to the prior mortgage until the mortgage is discharged. So, if the lawyer or notary absconds the funds, the previous owner remains liable.

You can reduce your risk of land title fraud with a few simple steps:
1. Ensure that the land registry office in your area lists you as the owner of your home.
2. Obtain a residential title insurance policy. It can protect homeowners and lenders from the costs and stress of land title fraud.
3. Ask for references. You can reduce the risk of being affected by choosing to work with reputable professionals who are licensed to work on your behalf.
4. Retirees who have paid off their homes and have a good credit rating may be more at risk as they may be less familiar with the odious nature of cyber crime.

The insurance bureau of Canada recommends these additional tips for safeguarding your online identity. If you have questions about land title insurance give us a call. You can also learn more about land titles at the Land Title Office here in Whitehorse.