When you buy your first home or condominium, or you are looking to rent, the last thing you want to think about is the possibility that you may be defrauded during the real estate transactions.
Unfortunately, real estate fraud is only too real and occurs regularly.
There are various kinds of real estate fraud, which include title fraud, mortgage fraud, and online rental/sale scams.
Title fraud is fraud is when someone steals your identity and then assumes the title of your property and either sells the home or gets a new mortgage for the home.
Title to a property means that you are the registered owner of this property in the province or territory in which you reside.
The most important thing in title fraud is the fact that a person’s identity has been stolen. This can be achieved in various ways:
- A scammer can get personal information through a phishing scam;
- Dumpster diving;
- Computer hacking; and
- Mailbox theft.
Once the fraudster has obtained your personal information, he or she will then register fake documents to transfer the property to themselves, and either sell the property or register a new mortgage in their name.
Mortgage fraud can occur in two ways. It can occur in the title fraud way in which a fraudster steals your identity and then poses as you to get a new mortgage on the title and then leaves with the cash while you are responsible for payments.
However, the person who owns the property for which he or she is taking out the mortgage commits another type of mortgage fraud. Some people may not even be aware they commit mortgage fraud.
This type of mortgage fraud is defined as deliberately misrepresenting information to receive mortgage financing that would not have been approved if the lender would have known the truth.
Examples of misrepresenting information include:
- Misrepresenting the amount and/or source of your down payment;
- Claiming you are a full-time, salaried employee if you are really part-time, on contract and/or self-employed;
- Lying about the length of service and/or position at your job; and
- Failing to disclose existing mortgage and/or debt obligations.
Online rental/sale scams
This is one of the most popular real estate scams. A property is advertised for rent on websites such as Kijiji and Craigslist. Often the rental is advertised at a low cost.
The fraudster will often impersonate a property manager, real estate agent or landlord/owner. Often the scammers get the property information off the MLS site.
Usually the scammer asks you to meet him or her away from the property, at another location, where keys are going to be exchanged, a tenancy agreement will be signed and most importantly to the scammer, and they will collect your rental deposit.
A person often finds out they’ve been scammed when they arrive at the property and find it’s already occupied.
What can I do if I’ve been the victim of real estate fraud?
Most people who own property in Canada have title insurance purchased for them by their real estate lawyer. A title insurer will often insure against certain types of real estate fraud, such as title fraud. If you have been the victim of real estate fraud contact your title insurer and see if you are covered for it. Regardless whether you were victim of a rental scam or a mortgage/title scam, you should inform your local police department and the Canadian Anti-Fraud Centre.
If you have been accused of mortgage fraud, consult a lawyer.
Protect yourself from real estate fraud