At least 3 B.C. homes listed for sale without homeowners' knowledge amid surge in title fraud in Ontario
There have been at least three cases of attempted title fraud in B.C. since 2019, according to the province's land title authority.
Title fraud is a complex real estate crime in which fraudsters purporting to be homeowners attempt to sell properties they do not own.
The Land Title and Survey Authority of British Columbia (LTSA) confirmed one home was allegedly fraudulently sold in 2019, followed by another in 2020. In 2021, a third attempt was thwarted before the transaction was finalized.
Both successful sales occurred in Richmond, just south of Vancouver, and the cases are currently before the courts.
The LTSA, which conducts between 800,000 to one million real estate transactions per year, says land title fraud is considered "rare" in B.C.
But a recent CBC News investigation revealed this type of crime appears to be on the rise in Ontario, where at least 30 homes in the Greater Toronto Area (GTA) have either been sold or mortgaged without the owners' knowledge since 2019.
Stand-ins pose as tenants, homeowners
The frauds are undertaken by a handful of organized crime groups, which look through publicly available property records to identify homes, usually without a mortgage, as a target. From there, the groups use stolen IDs and hire "stand-ins" to pose as tenants to gain access to the home, and impersonate homeowners to sell it.
The sale tends to happen relatively quickly, with the fake owners accepting the first reasonable offer they receive. In rarer cases, the fraudsters take out a mortgage on the home before making off with the cash.
LTSA confirmed the two sales in B.C. relied on a near-identical scheme, with forged documents playing a crucial role in the properties' sale from under the legitimate owner.
"In both cases, the property managers responsible for renting the homes took instructions from the fraudster from different phone numbers and email addresses than those authorized by the owners, and shared documents that enabled the fraudster to better impersonate the owners," read a statement from the Land Title Authority.
"Both properties were listed for sale by Realtors who accepted a scanned copy of a forged passport to verify the identity of the supposed owner. In one case, an unsuspecting legal professional retained by the fraudster impersonating the registered owner also relied on a copy of the forged passport to verify the identity of the client, and assisted the fraudster in transferring the title to the property."
Calls for more stringent identification verification
Richmond RCMP confirmed its Economic Crime Unit, a specialized section within the Organized Crime Unit, took over one of the investigations in March 2020 after the home was sold without the owner's permission in late 2019.
The victim was out of Canada at the time of the sale, and two suspects were identified and later arrested.
Doug Harris, a professor at the University of British Columbia's Allard School of Law, said while the current principal safeguard against title fraud is for legal professionals to check identification, the title registry system works to protect the transaction, rather than the individual.
"It seems counterintuitive that someone who owns a house all of a sudden ends up dispossessed of that house because somebody else, an innocent buyer, has made a transaction with a rogue. But that's what the system protects — it protects that transaction," he said.
"It's one of the risks in a system where a policy decision has been made to make it simpler to transfer interest in land."
The increase in cases in Ontario have resulted in calls for more stringent verification of identification.
Over the past year, CBC News has reported on numerous allegations of fake identifications and other documents being used to rent homes and take out fraudulent mortgages, but these attempted home thefts appear to represent an escalation in real estate fraud in Canada.
String of similar crimes in 2008
Ron Usher, general counsel at the Society of Notaries Public of British Columbia, helped stop a similar series of crimes in B.C. in 2008, after an organized group fraudulently sold five homes. In those cases, both the buyers and sellers were in on the fraud and were targeting homes owned by single men whose mortgage had been paid off.
Usher notified police after spotting a number of "red flags" in an ongoing transaction, and police eventually conducted a sting operation to arrest the perpetrators.
Usher says alarm bells for buyers, real estate agents and lawyers include: sellers seeming unfamiliar with the property, brand new documentation, and inconsistencies in data.
For example, in one case in Toronto, the person impersonating a homeowner mispelled his name twice signing documents — a detail real estate agents missed.
Usher says fake identification has grown increasingly easy to access and difficult to spot. In one recent case in B.C., an attempted fraudster managed to acquire a real B.C. driver's license in the name of the true owner.
"It takes real professional training to look for those red flags. It's an arms race. Everyone in the game has been trying to up their standards," he said, adding the crimes are relatively complex to pull off, and organized criminals are likely to repeat the crime as many times as they can until caught.
"There's so many touch points. There's a whole flow of cash. There's documented trail of money. You've got to see people, you've got to answers questions about things."
Usher says homeowners can protect themselves by setting up a Google alert for their property in case it is listed, and, most notably, signing up for title insurance, which will cover legal fees in the case of fraud — though the title insurance industry warns it isn't currently set up to deal with title fraud on the scale currently being experienced in Ontario.
Usher said most cases will not result in people actually losing their property — but victims of this type of fraud can face an arduous and expensive legal process to prove they are the rightful owner, or did not take out a mortgage themselves.
"All of us can relate to what a devastating thing it would be, basically finding out you have a very substantial legal problem," he said, adding that realtors, notary publics, lawyers and government should work together to improve practices around verifying identification.
"Everybody's got stars in their eyes about real estate. Everybody's got something they're getting out of it and those things can always blind you to red flags."