Title fraud소유권 사기 (타이틀 사기)

What is it?

Title fraud is when someone pretends to be the owner or uses forged papers to sell a home or put a mortgage (a loan secured by the home) on it without the real owner knowing. The fraudster does not take the building away; they change the register (the official land record).

All land registration in Ontario is done online. The register is the official record of ownership and other legal rights such as mortgages, transfers and leases. So once a fake document is registered, the register shows someone else as owner, or a loan you never took out.

Tools that can be used include stolen or bought identities, people who do not exist, and forged powers of attorney. The Law Society of Ontario tells lawyers to watch for these as "red flags".

What does the law call a "fraudulent instrument"?

Section 1 of the Land Titles Act defines a "fraudulent instrument" (document) and a "fraudulent person" like this.

• A document in which a fraudulent person pretends to receive or transfer land or an interest in land
• A document given under a forged power of attorney
• A transfer of a mortgage (charge) that was given by a fraudulent person
• A fraudulent person is someone who forged the document, does not exist, or claims in the document to be the registered owner while knowing they are not

What happens when a fraudulent document is registered?

• Normally a registered document takes effect as the register shows (s. 78(4)). But this rule does not apply to a fraudulent document registered on or after October 19, 2006 (s. 78(4.1)).
• Documents registered after the fraudulent one that are not fraudulent can still be valid (s. 78(4.2)). So if the home is sold again or mortgaged again after the fraud, the real owner may not get the home back, or that mortgage may stay on it.
• A fraudulent document that would be void if unregistered is just as void after it is registered (s. 155).
• The Director of Titles or a court can order the register fixed if satisfied that a fraudulent document was registered on or after October 19, 2006 (s. 57(13)). If fraud is suspected, a caution (a warning that blocks dealings) can be put on the register.
• Making or trying to make a fraudulent entry on the register is an offence. A person can be fined up to $50,000 or jailed up to two years less a day, or both; a corporation can be fined up to $250,000 (s. 156).

Can you be paid back for what you lost?

The Land Titles Act has a Land Titles Assurance Fund. A person who wrongly loses land or an interest because a fraudulent document was registered can be paid from the fund if all of these are true (s. 57(4)).

• You lost the land or an interest in it because a fraudulent document was registered
• You show the due diligence (reasonable care) set by the Director of Titles — ask a lawyer about the exact standard
• You cannot get fair compensation any other way
• You apply to the Director of Titles within 6 years of the loss (s. 57(5.1) and (6))

People who knowingly took part in the fraud, and claims made on or after October 19, 2006 on behalf of an insurer, cannot be paid from the fund (s. 59(1)).

Does title insurance help?

Title insurance usually lists title fraud as a covered risk. Proving fraud and fixing the register takes time and legal fees, so it matters whether the policy pays those costs. Coverage and limits differ by policy, so check yours.

A claim to the fund made on behalf of your insurer is not allowed (s. 59(1)). Think of the fund and the insurance as two separate paths.

Red flags in a deal

The Law Society of Ontario’s rules for lawyers list red flags like these in real estate deals. Buyers, sellers and owners can use them too.

• Odd price handling, such as deposits said to be paid straight to the seller, or a quick resale at a much higher price
• "Straw people" who may not exist or whose identities were bought or stolen, or suspicious use of powers of attorney
• A buyer who puts in little or none of their own money
• A third party who keeps stepping in to give instructions, supply ID or send or receive money
• Sale money sent to people who have nothing to do with the deal

Habits that help prevent it

• Check your own title from time to time. You can search it yourself on ServiceOntario’s OnLand for a fee. ServiceOntario will not search or explain records for you, so if it is hard, ask a lawyer or a title searcher.
• Do not hand out copies of your passport, driver’s licence or signed papers to just anyone. This is a basic habit that is commonly suggested.
• Never let anyone fill in a loan application in your name. FSRA warns that allowing someone to falsify documents in your name is mortgage fraud and can lead to criminal charges.
• If a home is empty for long periods or rented out, keep track of who receives the mail and property tax bills. This is a common habit, not a legal duty.

If you suspect fraud

1. Check the parcel register. Look for a transfer or mortgage (charge) you do not know about.
2. Talk to a real estate lawyer right away. They can tell you whether you need an application to fix the register, a caution or a court case.
3. If you have title insurance, tell the insurer and check the policy’s claim steps and deadlines.
4. If you have a mortgage, tell your lender too. Ask your lawyer about other steps such as reporting the crime.
5. If you cannot be paid back any other way, review with your lawyer whether you can apply to the Land Titles Assurance Fund within 6 years of the loss.

An example