There have been two incidents this month of homeowners coming back from a trip to find their house has been sold or listed on the market without their consent.
Earlier this month, Toronto police warned the public of two people who impersonated the owners of an Etobicoke-area home, allegedly hired a real estate agent, and listed the house for sale.
Police say the two unidentified individuals were able to sell the property, and new homeowners took possession of it.
Toronto police said they are now investigating a second, similar incident. This time, police say the house was listed, but the fraudulent owners were not able to complete the sale. Investigators believe both cases are connected.
There are limited details about what happened this time, but Royal LePage agents fell victim to the latest scam.
“This very unfortunate incident was clearly a coordinated scheme aiming to take advantage of real estate professionals and an innocent family,” Anne-Elise Cugliari Allegritti, spokesperson for Royal LePage, told CTV News Toronto in a statement Thursday.
So, what can prospective homebuyers and homeowners do to protect themselves against title fraud?
TITLE FRAUD AND TITLE INSURANCE
The word “title” is used to describe someone’s right of ownership to land. Title fraud is when the tile of someone’s home is stolen.
According to the federal government, the fraudster will either sell the home or re-mortgage the house.
“Title fraud usually starts with identity theft, which can happen if somebody steals your personal information,” the federal government said.
FCT, a residential insurance company, notes it’s up to the true homeowner to prove they’ve been scammed; if they don’t have title insurance, it can take “considerable time, money, and effort” to get everything back.
Title insurance can protect property owners against any losses related to the property. While it is not a requirement to have it in Ontario, Osman Omaid, a realtor with Strata.ca, “strongly” advises getting it.
“I think the best thing people can do is get title insurance,” Omaid told CTV News Toronto Friday. “Real estate professionals [should] always advise to get title insurance.”
Omaid says this kind of insurance can protect homeowners in many ways, not only during fraudulent sales, but also when previous owners haven’t paid off their property taxes, condominium fees, or utility bills prior to the sale.
“Title insurance is basically there to take care of you in any gray-scale areas where it’s sort of like, ‘Okay, I should have done my due diligence, but at the same time, it’s not really my fault that this happened [because] someone should have checked this,’” he said.
WHAT REALTORS AND AGENTS DO TO VERIFY PARTIES IN HOME SALES
Paul Baron, president of the Toronto Regional Real Estate Board (TRREB), told CTV News Toronto real estate brokerages have an obligation to perform their due diligence when taking on clients, as required by the Real Estate and Business Brokers Act, and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
“By law, registrants who trade in real estate are required to use their best efforts to prevent error, misrepresentation, fraud or any unethical practice in respect of a trade in real estate,” Baron said in a written statement.
Real Estate Council of Ontario (RECO) Registrar Joseph Richer told CTV News Toronto in a statement the most common way for agents to verify parties in a sale would be to rely on government-issued photo identification to verify the identity of the person they are dealing with.
“Resources are available to those who trade in real estate to assist with making their best efforts to verify the identity of homeowners, including use of the land registry service to verify the owner of the property and verifying the identities of individuals they are dealing with,” Baron said.
Outside of checking someone’s photo ID during a sale, Omaid says he can verify a seller’s background through a program called GeoWarehouse, which can give him more detailed information about the property in question.
“We are able to see whose name is legally registered under the property,” he said. “There’s a lot of steps we take as realtors to make sure that we are speaking with the correct person.”
In the event that a realtor or agent falls victim to fraud, Baron says it’s up to law enforcement or police to get involved. Baron adds RECO can get involved in cases where due diligence was not performed by agents.
HOW TO PREVENT REAL ESTATE FRAUD
The federal government has a few tips online for what Canadians can do to protect themselves against real estate fraud, including keeping your mortgage information in a safe spot, speaking with your lawyer before giving someone else the right to your home, and researching anyone who tries to offer you a loan.
If you think you have fallen victim to title fraud, the federal government recommends contacting the Canadian Anti-Fraud Centre, reaching out to your provincial land registry’s office, and filing a police report.
– With files from CTV Toronto’s Beth Macdonell and Phil Tsekouras