Recently, a Canadian couple learned that their home was sold without their consent. Although theft of this nature is rare, similar cases are on the rise in the country’s largest city. Toronto police asked the public for help in catching two people involved in a complex fraud scheme early this year. According to police, the individuals used fake identities to sell a home in the city, handing over the keys to an unsuspecting buyer.
During January 2022, the real owners of the home were out of the country for work. Months later, when their mortgage payments disappeared from their bank accounts, the couple discovered that their home had been sold without their knowledge.
There is a fascination with real estate in Canada, particularly in the Greater Toronto Area and Vancouver, where the average home costs over C$1m ($749,000; £620,000) and housing is scarce. There have been similar stories recently from other Toronto property owners, and investigators say these once-rare cases of property title fraud are becoming more prevalent.
According to Trevor Koot, the CEO of the British Columbia Real Estate Association, these types of cases are “definitely unique at this point in time.”
“I have never seen anything like it,” he said, especially when it comes to the sophistication of the crimes.
In Canada, how much has title fraud increased?
Home or property ownership schemes can typically take two forms: mortgage fraud and title fraud. A Toronto-based firm that investigates white-collar crime, King Advisory International Group, said mortgage fraud is more common than other types of fraud. Fraudsters use fake identification documents to take out a second mortgage on a house they don’t own after paying off the first mortgage nearly or fully.
In contrast, title fraud occurs when tenants of vacant properties pose as owners and sell the properties to earnest buyers, resulting in a total title transfer. Title insurance helps re-establish ownership of the property and covers legal fees incurred during the process, which allows the real owner and buyer to get some of their money back. Since 2020, Mr. King has observed an increase in both mortgage fraud and title fraud.
There has been an increase in title fraud in the last few years, according to his firm. Fraudsters often take over property in places like the US and China while the owners are away.
An example of one of Mr. King’s clients was a couple who moved for work to the UK from Toronto in 2018. Their home in Canada was sold from underneath them in 2022, he said.
The home was sold for C$1.7m, and it had been fully renovated by the time the couple found out it had been stolen last June. As of February, they are still working on restoring the house’s title.
Between the 1960s and 2019, Chicago Title Insurance Company’s Canada branch had seen only two cases of fraud – mortgage and title.
In the Greater Toronto Area, which includes the city and surrounding municipalities, there are dozens of cases of title fraud, including at least five.
In British Columbia, home to Vancouver, where the average home is worth C$1.1 million, title fraud has also been reported, though less frequently.
There have only been two successful title fraud attempts since 2020, according to the Land Title and Survey Authority (LTSA). LTSA processes up to one million land title applications per year, and these types of fraud cases are extremely rare.
In 2021, a man in Luton returned to his house only to discover that it had been sold without his knowledge. In the past four years, the UK Land Registry has reported an average of 41 cases of both mortgage and title fraud. Cases reached a peak of 50 in 2016-2017.
What are the reasons for the increase in title fraud reports?
There has been a surge of reported cases, particularly in Toronto, which puzzles experts. Virtual real estate deals during the pandemic might have made fake identity documents more difficult to detect. The pandemic has also forced some people to leave their homes for longer periods due to travel restrictions, Mr. King said. The perpetrators – some of whom have been linked to organized crime – seem to have a good grasp of the Canadian real estate market.
The fraudulent IDs used in these transactions often look authentic, and perpetrators often hire skilled actors to pose as homeowners.
“IDs are so easily faked now that they can’t be relied upon to close a C$3 million deal,” Rider explained.
Real estate in Toronto has grown significantly in value over the last few decades. The average home in 1996 cost C$198,150. Last year, it was C$1.18m.
As a general counsel with the Society of Notaries Public in British Columbia, Ron Usher said, “It makes sense that there is a lot of attention paid to where real estate is most valuable. “Yet Mr. Usher cautioned that little is known about these reported cases of title fraud. “These crimes are difficult to commit, and they are often caught and stopped. “To determine the root causes and if more can be done to protect Canadian homeowners, he and others have called for a national investigation.