Dear David,

I’ve seen stories in the news about homeowners being scammed out of their properties through title fraud. Thieves steal someone’s identity, then take out a new mortgage in that person’s name, or even sell the home without the real owner knowing. How does someone protect their home from being stolen this way? And why in these cases, is the innocent homeowner left holding the bag, rather than the lender who approved the fraudulent loan? – ON THE LOOKOUT

DEAR LOOKOUT: This is one of those questions that seems to pop up after a news story hits the headlines, and it’s always worth commenting on.

While title fraud is rare, it’s one of the most unsettling forms of real estate crime. Essentially, fraudsters use stolen identification to impersonate a homeowner, then take out a mortgage or sell the property without the true owner knowing. The good news is that you can protect yourself, and it starts with title insurance.

Title insurance is typically purchased when you buy your home or refinance, and lasts for as long as you own the property. It covers losses related to forgery, fraud, or impersonation, including the fraudulent mortgaging or transferring of your title. If this type of crime should ever happen, your title insurer steps in to fix the problem, pay legal costs, and restore ownership. It’s a one-time cost that offers lifetime peace of mind.

If you didn’t buy title insurance when you purchased your home, you can still get a homeowner’s policy. It’s quick to arrange through your lawyer, and for most people, it’s a small price to pay for comprehensive protection.

Once your mortgage is paid off, another smart move is to consider setting up a home equity line of credit (HELOC), even if you never plan to use it. Because the HELOC is registered against your title, it adds an extra layer of complexity for potential title thieves. It’s like putting a deadbolt on your front door: it might not stop every thief, but will make them think twice before trying to target your house.

Often it’s the homeowner (and not the lender) who faces the initial fallout of title fraud, because of the legal tangle this crime creates: the lender advanced money based on documentation that appeared to be legitimate, and because of this, ownership disputes must be resolved through the courts. Without title insurance, the court process can be lengthy and expensive. With it, you’re protected from financial and legal burdens.

PRO TIP: Even if you’ve owned your home for years, it’s never too late to add title insurance. Pairing it with a HELOC offers an additional layer of protection, while deterring potential thieves. Together, title insurance and a HELOC are the most effective one-two punch against title fraud in Canada. #Advice #AskDavid #TheNegotiator 

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.