For a great many of us, purchasing a home is the largest investment we will make in our lifetimes. Despite the enormous price tag and the fact that most of us will be paying off our mortgage for decades to come, on a more personal level, the act of purchasing a home probably stirs up a number of emotions in great many of us. We’ve all heard about how emotions can cloud our judgment, leaving room for oversight. Oversight in turn, can lead to a number of dangerous outcomes, principally fraud.
Home-buyers should be aware of three main types of fraud; Title fraud, Mortgage fraud and Value fraud.
Title fraud occurs when a fraudster changes the ownership or title of a property into his/her or another name in order to sell or refinance the property.
Mortgage fraud occurs when the fraudster leaves title or ownership in the owner’s name but mortgages it without the owner’s knowledge, sometimes by fraudulently discharging the existing mortgage.
Value fraud occurs when a homebuyer is led to believe the property is worth considerably more than it really is through fraudulent concealment or intentional misrepresentation, such as giving the buyer a forged appraisal or fraudulent “comparables.”
No matter where you’re buying a home in Canada these days, chances are you’re part of an active real estate market – one in which homes have had many owners over the past few years. The more often your home has changed hands, the more difficult it can be to trace a problem with title back to a specific owner. That’s why more and more home-buyers are opting to protect their most important investment through title insurance.
Title insurance is a form of insurance that provides compensation for losses suffered from title issues even if they are not discovered until years after the sale is completed. Title insurance protects home buyers against unpredictable or undetectable problems related to your home’s title.
Risks covered by title insurance include unpredictable or undetectable issues such as forgery, fraud, missing heirs, unregistered rights-of-way and other issues that can affect rights of ownership. While real estate lawyers protect home-buyers with thorough record searches and inquiries during the home ownership transaction, they will also often arrange for title insurance to try to offset issues that could not easily be discovered and certain future problems.
If a problem arises with title that only becomes known after closing, title insurance can often compensate the home-buyer for the problem.
“Home-buyers put a great deal of time and energy into finding their dream home, so it’s good to protect it with appropriate insurance - not just for fire and theft, but for title-related issues,” says Ray Leclair, an experienced real estate lawyer and vice-president, TitlePLUS ® . “Title insurance provides a security blanket for the homeowner once the deal is closed.”
Identity theft and fraud have increasingly become a new worry with respect to title. A criminal with the homeowner’s information can transfer title or take a mortgage out on the property in the homeowner’s name. The criminal takes off with the money and the homeowner is left without title or with a mortgage improperly registered against the property. Title insurance will assist in recovering title or removing the fraudulent mortgage.
Title insurance is a one-time purchase, usually made at the time the home is bought, although also available later for those who already own their homes. For a $500,000 home, it costs about $250 to $300. You pay that money only once for as long as you or your heirs own the home. There are no deductibles and no additional annual fees.
Also, purchasing title insurance can sometimes save on closing costs as a real estate lawyer can often reduce the number of searches and investigations, thereby saving the clients out-of-pocket costs on their overall legal bill.
Title insurance is also often bought when homeowners are refinancing. A useful resource for people looking to learn more about title insurance, the role of a lawyer and refinancing is the TitlePLUS Real Simple Real Estate Guide, which is available for free. The guide provides important information on the role of a real estate lawyer as well as specifics about refinancing a mortgage. The guide also offers useful calculators, a glossary of terms and a locate-a-lawyer tool.
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