Gillian Shaw
Sun
British Columbia homeowners are being warned to check their property title to ensure their property hasn’t been transferred to con artists who then register hundreds of thousands of dollars in mortgage debt against them.
This comes as B.C.’s land title authority is reviewing a system that could see someone fraudulently obtain title to a home and then resell it to an innocent third party, leaving the original homeowners with financial compensation but potentially driven out of their homes.
“We are currently looking at whether or not there are reforms that can be brought into play so at the end of the day the right thing occurs,” said Godfrey Archbold, president and chief executive officer of BC’s Land Title and Survey Authority.
While current fraudulent transfers uncovered in the province have been stopped before the property was resold, Archbold said as the law stands, if a property were to be resold, the new buyer would be entitled to take possession and the original owner would have to seek compensation from the land title assurance fund.
That happened in B.C. in a case where two people owned a home jointly, and one successfully sold it without the other’s knowledge. The victim was compensated from the assurance fund, but didn’t get the property back.
Archbold said the reforms are being looked at for cases in which the facts around the ownership of a property suggest a long-term relationship or a sentimental value.
“If you have only owned a home for six months, the prospect of financial compensation doesn’t bring the same burden,” he said.
The authority is also reviewing a recent B.C. Supreme Court decision that could leave the assurance fund on the hook for mortgages obtained on properties that were fraudulently transferred.
In a rec sent decision, the court ruled that a property be transferred back to the rightful owner, but it said the mortgages taken out by the fraud artist still stand and the owner had to seek compensation from the assurance fund.
Archbold said property owners can safeguard their titles by simply ordering a duplicate.
“You can apply, under the Land Title Act, and obtain a duplicate certificate of the title,” he said. “You get a paper copy of the title which you should hold in safekeeping, and we put a note on that title that a duplicate has been issued.
“That means any time anybody wanted to have any kind of change made to the title — whether we receive an application to transfer, or a mortgage — the duplicate has to be surrendered.
“That gives a person comfort that we are not going to do anything to that title until the duplicate is surrendered.”
A lawyer, notary or real estate agent can obtain such a duplicate, but this would cost homeowners about $50, in addition to any professional fees.
Property owners can also have their lawyers or notaries place an alert on their title so they are informed of any transaction, but that only comes after the transaction has occurred and so it wouldn’t block a fraudulent transfer.
In the wake of news that con artists operating in the province have successfully sold homes without the owners’ knowledge, BCAA Insurance advised consumers Monday to take steps to guard against losing money and the title to their homes.
There has been a dramatic rise in suspicious cases in B.C., according to First Canadian Title, underwriter for the title insurance sold by the BCAA.
Susan Leslie, vice-president of legal, claims and underwriting for First Canadian, said from 2004 to 2007, said the underwriter declined to insure $8.5 million in suspicious cases in B.C. So far this year it has declined almost half that, $3.5 million.
Title insurance with First Canadian comes with a one-time premium that varies with the price of the property. Even when the title transfer and mortgage are fraudulent, Leslie said the owner has to go to some trouble to get it reversed and there have been cases where financial institutions have tried to get the victim to pay off the fraudulently obtained mortgage.
“The owner still needs to hire a lawyer, needs to go to the land title survey authority. They still need to take the steps to rectify their title.
“If a lender has put a mortgage on the property, that lender is not going to walk away from their mortgage,” she said.
“[The victims] are right legally, but that doesn’t save them the cost of the fight.”
© The Vancouver Sun 2008