Legal experts share tips for homeowners
TORONTO, March 16, 2010 – A home is the largest purchase most Canadians will make in their lifetime. In many cases, it takes years of saving to build a down-payment for the home and many years more to pay off the mortgage. Because of the high value attached to homes, they are also a key target for fraud and Canadians have the potential to lose big-time if they don’t know how to protect themselves.
“No one is immune from real estate fraud,” says Ray Leclair, an experienced real estate lawyer and vice-president, TitlePLUS(R) at Lawyers’ Professional Indemnity Company (LawPRO(R)). “We’ve seen more cases of real estate fraud in recent years and there is potential for every Canadian homeowner to mistake bogus deals for great opportunities or find themselves the victims of scams, theft or stolen identity.”
Homeowners should be aware of three main types of fraud:
- Title fraud, when a fraudster changes the ownership or title of a property into his/her or another name in order to sell or refinance the property;
- Mortgage fraud, when the fraudster leaves title or ownership in the owner’s name but mortgages it without the owner’s knowledge, sometimes by fraudulently discharging the existing mortgage; and
- Value fraud, when a homebuyer is led to believe the property is worth considerably more than it really is through fraudulent concealment or intentional misrepresentation, such as giving the buyer a forged appraisal or fraudulent “comparables.”
Leclair suggests that homeowners can help protect themselves from real estate fraud by following these simple tips:
- Keep personal documents protected – don’t leave personal or confidential documents (such as your birth certificate, bank account information, social insurance number or credit card details) where others can find them, especially if you are renting or showing your home and may have strangers in-and-out.
- Know your credit score and history – check your credit reports regularly to see if there have been any inquiries that you don’t recognize. If a fraudster is impersonating you, a prospective mortgage lender will likely have requested a credit report.
- Know the property – never buy a property without looking at both the exterior and the interior, no matter how good the price. Don’t be rushed into buying.
- Never sign documents you have not read thoroughly – take documents to an independent real estate lawyer for explanation. High pressure and short timeframes are the fraudster’s best tools.
- Purchase title insurance – title insurance can help in two settings – when you are buying your home or if you already own a home (and do not yet have a title insurance policy). Title insurance policies provide coverage for fraud that may have occurred prior to your purchase (for example, if it turns out that the real owner was defrauded and did not have the right to sell the property) and coverage if your property becomes a target of fraud in the future.
- Watch for signs – make sure you receive tax and utility bills regularly. If you don’t, they may have been diverted to someone else. If the property is rented, view it every so often to make sure the tenants have not listed it for sale or sold it to an unsuspecting buyer.
“Homeowners must be vigilant about protecting their home and their identity,” says Leclair. “In an active real estate market, with more homes changing ownership, the need for caution is heightened. Consider title insurance – it is inexpensive to obtain, yet invaluable.”
About LAWPRO and TitlePLUS title Insurance
TitlePLUS title insurance is provided by Lawyers’ Professional Indemnity Company (LawPRO), an insurance company that is licensed to provide professional liability insurance and title insurance in most jurisdictions across Canada. www.lawpro.ca
TitlePLUS title insurance is the only all-Canadian title insurance product on the market today. It protects home buyers and mortgage lenders under the same policy (and for the same premium) from title-related and other problems that could affect ownership or the marketability of the property, and covers the legal services(1) provided by the lawyer closing the purchase. www.titleplus.ca