Can Someone Actually Steal Your House?

Diane Buchanan • March 29, 2016

It might sound unbelievable, but it’s absolutely possible for someone to steal your house. It’s called title fraud, and it’s a problem that has been around for a while in Canada. And although exposure to title fraud is minimal compared to, say, debit or credit card fraud, the damage to its victims is considerably more severe. Title fraud is potential big money for perpetrators, and their schemes can be complex to say the least. Don’t underestimate the lengths to which they will go to cash in on a big payday.

Let’s break down title fraud, identify who is most at risk, and look at the best ways to protect yourself from having your house stolen out from under you!

Title Fraud

Title fraud almost always starts with identity theft. When someone steals your identity, they actually become you (well not really, but as far as anyone who doesn’t know you is concerned, they are you). So once they become you, they are acting as you, the scope of the fraud starts with what you could carry out as normal business, and then grows from there with increased deception and elaborate plans.

Here are some common scenarios. The perpetrators could do any of the following:

  • Using your identity, they could discharge your current mortgage and replace it with one at higher value, pocketing the difference in cash, using a bank account they created in your name, only to disappear before the loan/mortgage goes into arrears and a collection agency calls seeking repayment.
  • Using fake id and forged documents, they could transfer the title of your property out of your name, register a home equity line of credit or mortgage against the title, advance the funds in cash, and disappear, leaving you with a foreclosure notice a few months down the road.
  • Depending on market conditions, if it’s a real seller’s market, they could even potentially sell your property sight unseen, close the transaction, and skip town before the duped buyers show up at your house in a moving truck, ready to take possession.

The scary thing is, as the victim of identity theft and/or title fraud, there is legal precedence set that as the mortgage was taken out in your name and it was done so as a legal transaction, the onus is on you to prove that you were the victim of fraud. Until you do so, you are responsible for the repayment of the debt or it will damage your credit score.

As in the case of someone fraudulently selling your house out from under you, there is legal precedence set where the new buyers could actually be awarded possession of your house, because you were the victim of identity theft and title fraud, they weren’t. As far as everyone else is concerned, the buyers executed a perfectly legal transaction. It falls on you to prove otherwise!

Who is Most at Risk?

The more equity you have in your property, the more likely you are to be targeted. Let’s say your property is worth $450k, and you owe $150k on your mortgage — there is potential access to $300k of equity. However, as the maximum refinance amount in most cases is 80% of the property’s value, in this case $210k would be accessible. And as most lenders limit the amount of cash you can refinance out of a property to $200k, this is a perfect target.

Properties that are owned clear title (no mortgage or line of credit registered against the home) are considerably more susceptible than properties with a mortgage because there is no mortgage to discharge. Essentially, there is one less hurdle for the fraudster to register a new mortgage or transfer the title.

Unfortunately, if we have to label an age group that is most at risk, it would be the older generation. Seniors are more likely to own their properties clear title and are less savvy about identity theft and may take longer to realize something is going on.

Protect Yourself!

Okay, if your heart is beating a little faster now, don’t worry, it will be okay. Here are some practical steps you can take to protect yourself!

The first line of defence to prevent title fraud is to protect yourself from identity theft. The financial consumer agency of Canada has some good information that outlines the basics. But a lot of it is common sense: keep your ID close, don’t disclose your personal information to strangers on the phone, and if something smells fishy, make sure to investigate before proceeding!

Now, in order to protect yourself from title fraud directly, you can purchase something called title insurance! And if you have recently purchased or refinanced your property, chances are you already have it. With the increasing amount of mortgage fraud, a lot of lenders (most broker channel lenders) make title insurance a mandatory condition of lending you money. This is a really, really good thing.

There are two types of title insurance available from a few different providers, offered directly from your lawyer’s office. The first is title insurance that covers the lender in case of title fraud, and the second covers the lender and you. It’s smart to go with the more comprehensive policy that covers you!

Title insurance is relatively inexpensive and covers you as long as you own the property (even if you discharge your mortgage). It can be purchased at any time, so if you aren’t sure if you have title insurance, might be worth a look through your mortgage documents. And if you can’t make heads or tails of them, take them to your mortgage broker and they will be happy to work through everything with you.

What to Do if You Suspect Fraud?

If you suspect or find out that you are the victim of title fraud, you should do the following:

  • Contact the Canadian Anti-Fraud Centre , at 1-888-495-8501 or info@antifraudcentre.ca.
  • Report the situation to the police.
  • Report the fraud to both credit reporting agencies Equifax and TransUnion.
  • Contact your provincial land registry and let them know.
  • Keep all documents and record the exact time you became aware that you were a victim.

 

This article originally appeared in the DLC Newsletter for April 2016.

DIANE BUCHANAN
Mortgage Broker

LET'S TALK
By Diane Buchanan February 11, 2026
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