Sun
It’s hard to imagine someone stealing your home. How would the thief load it into the getaway van?
It’s easier than you might think — so easy, in fact, that the number of cases is climbing.
It happened recently to Norman Gettel. As Vancouver Sun reporter Gillian Shaw explained last week, Gettel learned he no longer owned his Richmond bungalow when his tax bill failed to show up as usual.
A call to the B.C. Assessment Authority confirmed that he was no longer the registered owner and, to make matters worse, the land titles office advised that the new owner had put a $400,000 mortgage on his paid-off home, assessed last July at more than $600,000.
The mortgage is in default and CIBC Mortgages Inc. has demanded payment in full — $403,034.95 plus interest of $53.18 a day and legal cost of $375 — or it will “enforce its security” on the property.
Gettel, who is in his 70s and suffers from lung disease, has paid his lawyer $10,000 and the case is not yet in court. If and when it gets there, a happy outcome is not guaranteed. A B.C. Supreme Court decision in an unrelated case restored fraudulently transferred title to the true owner but it allowed the fraudulently obtained mortgages to stand.
When we raised the alarm about real estate fraud in an editorial about this time last year, we were inundated with calls from lawyers and realtors extolling the virtues of B.C.’s Torrens System of Land Registration, its indefeasibility of title, and comprehensive registry, which purportedly protects homeowners from exactly the situation Gettel finds himself.
There’s nothing inherently wrong with the system, which processes 14 million applications a year and keeps track of owners and lenders efficiently enough. But it cannot detect fraud, a deficiency exacerbated by electronic filing.
It’s instructive to note that the Land Title Survey Authority has paid out through the Land Title Assurance Fund just $389,000 in the past 18 years to settle two claims arising from fraud. The Financial Institutions Commission of B.C. requires one of the leading title insurance underwriters to reserve $4 million for title insurance policies written in the province. Clearly, title insurance protects homeowners; just as clearly, the assurance fund does not.
The one-time premium for title insurance up to a principal of $500,000 with one mortgage is $229, with increments of $1 per $1,000 above that amount, according to a quote one insurance company calculated for us. For this insignificant sum, Gettel could not only have protected his title without the expense of a lawyer, but the outstanding mortgage would have become the insurance company’s problem, rather than his. The insurer either settles with the lender or takes over litigation at no cost or inconvenience to the insured.
Title insurance may even prevent crime. From 2004 to 2007, one title insurance company refused more than $8 million in transactions because it suspected fraud. So far this year, it has turned down $3.5 million worth of deals.
Many lawyers in B.C. actively discourage homebuyers from buying title insurance, but wouldn’t think of waiving fire, theft and liability insurance. Their motives are difficult to understand.
Title and mortgage fraud are easy crimes to commit. Title insurance is inexpensive piece of mind. It should be part of every homebuyer’s protection package.
© The Vancouver Sun 2008