The High Cost of No Title Insurance

Published on 29 August 2022, 07:22:56 AM

A $17 million Toronto fraud is fair warning to Ontario homeowners and buyers about the value of residential title insurance. Project Bridle Path exposed a shocking plan to get title to vacant mansions in one of northern Toronto’s most expensive neighbourhoods.

Why Does Home Insurance Cost So Much?

Fraud and natural disasters are leading reasons home insurance costs in Ontario are so high. Strata owners were hit with a double whammy this spring when strata councils reduced their coverage because of astronomical hikes in building insurance rates. Insurer’s losses from title and mortgage fraud were partially behind condo owners’ higher costs. It’s a burden all Ontario homeowners share. 

Mortgage Fraud is a Criminal Offence

The sad fact is mortgage fraud, as in the Toronto Bridal Path case, is up 52 per cent since 2013 according to the credit bureau Equifax. Owing to its growing popularity, Ontario has seen a surge in fraudulent mortgage applications by mortgage brokers, real estate agents and lawyers who lie when they apply. The “sophisticated and complex” Bridal Path scheme occurred when the alleged perpetrators obtained mortgages by misrepresenting who the properties’ real owners were. It could happen to anyone, in any neighbourhood.

Forging Title Insurance Certificates 

Falsifying ownership of the toney properties was the first step in the elaborate plan. Police later found the homes were never properly registered with the Ontario land titles office. The seven-year crime investigation revealed mortgage lenders were shown false title insurance certificates. Forged property insurance certificates made the real estate transactions seem legitimate. The fact so many experienced lenders were fooled should make even the most veteran homeowner worried. 

Money Launderers’ Dirty Tricks

Money launderers and fraudsters out to get cash from fake mortgages are the usual culprits when property titles are forged. The real homeowner can be shocked to discover a criminal has mortgaged or remortgaged their home and they now owe the full loan amount. Meanwhile, the crook’s dirty money has been flushed clean through the equally sideswiped mortgage lender. The convoluted tactics make the proceeds of drug transactions or other major crimes harder to trace. 

A Mississauga Mortgage Fraud

Mortgage fraud hit home for a Mississauga property owner who inherited a $640,000 bank lien after fraudsters managed to get a mortgage loan using her name and home as collateral. Justice has been slow for the misfortunate GTA resident, who filed a fraud claim and affidavit swearing she didn’t receive the mortgage loan in 2012. 

Recognizing Mortgage Fraud

Like many elderly people, she was a target because her mortgage was paid in full. Seniors often have clean credit histories. Banks or mortgage lenders may be fooled into believing the homeowner is applying for a new or refinanced loan when an identity thief presents stolen or fake ID. 

Forged Documents Illegally Transfer Property Titles

Pretending to be you to get cash is not fraudsters’ only strategy. Professional crooks can also register forged mortgage discharge documents, transfer a property to their name and take out a new mortgage. The innocent homeowner may not know they have been scammed until the mortgage documents arrive in the mail. That leaves them on the hook for the legal and filing costs of fixing the headache a criminal created.

What Title Insurance Covers

Title insurance protects homeowners by providing valid proof of the legal owners’ identities. Registered mortgages, liens and easements attached to the property are listed. Anything out of the ordinary may be covered by the insurance policy:

• property line disputes 
• zoning violations
• trees, sheds or fences on neighbours’ properties
• construction liens a previous owner failed to pay
• easements allowing hydro companies or others to use your land
• fraudulent mortgages
• property registration fraud
• title defects 
• property survey mistakes
• or typos and errors in public records.

Who Needs the Extra Expense of Title Insurance?

Given the high cost of mortgage fraud, every GTA homeowner does. Title insurance can be purchased for pennies compared to the cost of a condo or home. It’s piece of mind well worth paying for.

Small Price for Big Protection

Title insurance is a one-time expense (average cost $250 and up) and is usually arranged by a homebuyer’s lawyer or notary public during a real estate purchase. The policy is included in the real estate closing documents. It can be willed to heirs or transferred to a spouse during a divorce or when property is gifted or sold to adult children. And if the homeowner has no title insurance, they can purchase a policy at any time from a local insurance broker. It’s a small price for big protection.

Ontario’s Flat Fee Real Estate Lawyers 

Axess Law Ontario real estate lawyers offer flat fees for most legal services. Video calls and e-signing appointments are available from anywhere in Ontario, 7 days a week, day or evening. In person meetings are available in Toronto, Scarborough, Vaughan, Etobicoke, Ottawa, Mississauga Winston Churchill or Mississauga Heartland. Make an appointment by dialing toll free to 1-877-552-9377 or 647-479-0118 in Toronto or use our online booking form. 
Click here to learn more about Axess Law’s real estate law services.