Title office swamped over fraud concern

Renewed concern over an old mortgage fraud problem has been in the news lately and that attention has people flooding the title office with calls from homeowners.  Last Friday the Vancouver Sun reported the story of a Retired Richmond man who discovered his house had been sold without his knowledge and a large mortgage taken out on the home:

It’s all part of an elaborate scheme that has surfaced recently in B.C. in which con artists are attempting to sell homes without the owner’s knowledge, leaving the homeowner off the title but with hundreds of thousands in new mortgage debt against the property.

In the latest variation of the scheme in B.C., a would-be seller contacts a notary or lawyer to carry out the sale of a home.

A buyer, who is thought to be in on the deal, applies for a mortgage on the property and if the transfer is successfully carried out, the mortgage funds are paid to the seller. The buyer and seller disappear and so does the money, often leaving the homeowner to discover the ruse only when the bank notices the mortgage payments aren’t being made and comes looking for its money.

While such fraud is not new, title insurance company First Canadian Title said B.C. has seen a jump in suspicious cases this year. And a B.C. Supreme Court decision this month ruled that while a true owner could regain title to a property if it was fraudulently transferred, mortgages taken out on the property — even if fraudulently obtained — still stand.

Unfortunately the only way to discover that you are a victim of this sort of fraud is by checking records with the title office, which has set off this recent flood of calls:

“A lot of people have been wanting information, and the calls are backed up for at least a day,” Ian Smith, director of land titles for British Columbia and registrar in the Land Title and Survey Authority’s New Westminster land title office, said Wednesday. “We had 180 I believe yesterday, and that was just in the New Westminster office.”

Meanwhile, the authority launched an appeal to a recent B.C. Supreme Court decision that ruled that while a title that had been fraudulently transferred should be restored to the rightful owner, a mortgage then taken out against the property would stand. The ruling suggested that the owner of the property could seek compensation from the land title assurance fund.

If you are concerned about this sort of fraud and own your home outright there is a way to protect yourself:

Homeowners who are worried, though, can request a duplicate certificate of indefeasible title, which can only be issued for titles that have no financial charges against them, useful perhaps since the con artists target homes that are mortgage free. New Westminster real estate lawyer Alex Sweezey said strata owners also are not a target because on a condominium sale lawyers also have to deal with the strata management company.

The cost of the duplicate title is $50, but once it has been issued nothing can be registered against the title until it is surrendered to the land title authority. Smith said homeowners can get a form to request the duplicate from the land title office or from most lawyers or notaries. However, if it goes missing, replacing it can be costly and time-consuming, involving affidavits and other requirements.

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kim
kim
12 years ago

RE:Why don’t they just require the bank or mortgage lender to notify the occupants of the home? That would kill a lot of the fraud right there. Really the mortgage lender should be on the hook if it can be shown that they did not perform due diligence.

the Ontario ruling was based on this. If they sent out an appraiser then the occupants/owners shocked looks would give a heads up!

I'd take the BC ruling to Federal Supreme Court!

patriotz
patriotz
12 years ago

what do you mean "same sort of law"? If you authorize a general contractor he then has the right to authorize subcontractors, who have the right to place liens.

What does this have to do with fraudulent sales or mortgages?

Drachen
Drachen
12 years ago

"My business law 101 tells me, the owner never enters a contract with the bank (no acceptance, no consideration) why would the contract stand in this case?"

Liens against a property are subject to the same sort of law. For example if you hire a general contractor to do some upgrades on your house and he does not pay the plumber or the electrician, goes bankrupt or skips town you as the property owner are on the hook. This is why people who know their stuff always hold back a percentage of the contractor's fee until three months after work is completed (liens must be filed within 3 months).

Anonymous
Anonymous
12 years ago

Is B.C. the world capital of organized crime?
http://www.youtube.com/watch?v=i1LY561JCbE

blueskies
blueskies
12 years ago

drachen:

good find!

pretty bird… otherwise known

as the red headed double

breasted mattress trasher 🙂

Anonymous
Anonymous
12 years ago

alexcanuck:

Ths for the explaination. It makes everyone happy.

But then, if the judge is only ruling on the title, he should keep his month shut on the mortgage issue.

Also, in a practical sense, what good is the title if there is a mortgage on it?

Drachen
Drachen
12 years ago

/dev/null

You just don't know how to analyse data that's all. You only need to consider trends in your analysis when they are going the direction you want them to go!

/dev/null
/dev/null
12 years ago

Thanks for the link, Richard. I found the stats were presented in a confusing way but maybe that's just me.

I noticed that they predict Vancouver sales down 20% for the year. By my simplistic calculations we're down 17% now (Jan->May inclusive) but May was down 29% according to Paulb's numbers. Seems to me that they're not considering the trend.

alexcanuck
alexcanuck
12 years ago

The way I read that mortgages taken out on the property — even if fraudulently obtained — still stand, I thought the court was not ruling on the mortgage issue, only the title. Rather than affirming the mortgage, pretty much saying the issue at hand was only the title. The separate Ontario case that DID rule on the MORTGAGE was pretty quick to let the scam victim off the hook. Just a case of jurisdiction, seems pretty clear to me.

Judges must be careful not to open cans of worms other than the one in front of them.

Though I am not a lawyer, of course. (My lawyer made me say that.)

Anonymous
Anonymous
12 years ago

Owner: Didn't do anything wrong

Bank(Mortagage provider): Didn't check the Mort. App.

Can someone in the legal profession explain why the owner is on the hook in this case? What legal ground is this decision based on?

My business law 101 tells me, the owner never enters a contract with the bank (no acceptance, no consideration) why would the contract stand in this case?

Not looking for rent! but real explaination.

jesse
jesse
12 years ago

There was a big stink involving Maple Trust trying to foreclose on a homeowner in Ontario based on a mortgage obtained fraudulently. kabloona is right: the court said Maple Trust held the bag. I would expect a similar ruling in BC.

Drachen
Drachen
12 years ago

I don't think anyone needed more proof that the Florida market is in the crapper. But here is a Craigslist ad you just don't see every day.

http://florence.en.craigslist.it/vac/725787925.ht

It seems that this offer includes not only the home but the seller is giving herself away to sweeten the deal. Personally I'm not a silicone man so she's not really my style but some of you may want to put in an offer on this well maintained, double entry, extended terrace gem!

kabloona
kabloona
12 years ago

Yup, they would have a lien against the property. By the way, this law was changed in Ontario last year, no reason why it should stand in BC.

umdesch4
umdesch4
12 years ago

Ok, so how far can this go? If the bank's still have a valid mortgage taken out on the property, can they get law enforcement to forcibly evict you as a squatter so they can repossess the property?

Vansanity
Vansanity
12 years ago

Building permits were up this month and sales down, inventory up. Boom is over but there are tons of cranes still working away around town… I wonder what the number is for pre-built units that remain unsold right now. This is going to end ugly. I still think fall of next year is when we're going to really start to see this all go for a sh**, price wise at least.

Johnny33
Johnny33
12 years ago

And people wonder why criminals love it here? It's because the victims are on the hook for their crimes while they receive not much more than a slap on the wrist if (big IF) they're caught. What a joke.

anon
anon
12 years ago

I don't know about Sharapova, but I know that Anna Kournikova was PRICELESS.

richard
richard
12 years ago

now it's TD saying the housing boom is over.

and recreational property price increases slowing

in other news, maria sharapova has been eliminated from wimbledon 2008.

Vansanity
Vansanity
12 years ago

Completely Off-Topic – The Dow is getting slaughtered today… currently down 306 pts! The fall has been caused by oil prices continuing to rise and a number of stocks being downgraded in the Auto and Financial sectors.

Drachen
Drachen
12 years ago

Why don't they just require the bank or mortgage lender to notify the occupants of the home? That would kill a lot of the fraud right there. Really the mortgage lender should be on the hook if it can be shown that they did not perform due diligence.

patriotz
patriotz
12 years ago

Of course the province of BC has full constitutional jurisdiction over property rights and land titles, and can easily prevent this sort of thing from happening with simple legislation. They can even make it retroactive, because it's a civil law issue.

Right Gordo?

Bubble Lad
Bubble Lad
12 years ago

Tip of the iceberg.

Does this happen anywhere besides BC, or is this another one of the things that makes us "The Best Place on Earth"?

They're going to be spending the next twenty years in BC just trying to figure out all the RE scams run in the last five.

Has anyone read "McMafia" (Misha Glenny) – there's an entire chapter on BC – among other tasty tidbits, it states BC has the highest per capita number of gangs IN THE WORLD!" – is that even possible? I've been spending the last few days thinking I misread it.

Scratchy
Scratchy
12 years ago

"B.C. Supreme Court decision this month ruled that while a true owner could regain title to a property if it was fraudulently transferred, mortgages taken out on the property — even if fraudulently obtained — still stand."

Good grief – sounds like the banks had the best lawyers as usual. If they are taken in by fraud, *you* are on the hook.