Homeowners still at risk
Doesn’t provide reasonable costs
Excerpt of an article by Bob Aaron
Government Services Minister Gerry Phillips has introduced a bill that is intended to ensure that ownership of a property cannot be lost as a result of the registration of a falsified mortgage, fraudulent sale or forged power of attorney.
Under the cumbersome moniker of Ministry of Government Services Consumer Protection and Service Modernization Act, Bill 152 amends 53 pieces of legislation, including the Land Registration Reform Act and the Land Titles Act as they affect property owners.
Here’s a scenario explaining how the new legislation will work:
Tony is a tenant in a house owned by Owen Owner — an absentee landlord. Tony Tenant obtains a fake Ontario driver’s licence and Social Insurance card in Owen Owner’s name from the same source that my dog Benjy used to obtain his own Ontario driver’s licence.
Tony calls his local real estate agent, and lists the house for sale.
No sign is placed on the front lawn at Tony’s request.
The agent shows a number of buyers through “Tony’s” house and eventually Peter Purchaser agrees in writing to buy the house from Tony Tenant, who is masquerading as Owen Owner.
Peter Purchaser has a good job and excellent credit and easily gets a mortgage for 75 per cent of the $300,000 purchase price from the bank.
Peter and Tony (alias Owen Owner) retain lawyers for the transaction.
Both lawyers practise only real estate law and are familiar with the antics of title fraudsters.
On closing, both lawyers check their client’s ID cards and find nothing amiss.
Tony’s ID, of course, is a high quality fake. The deal closes after the bill becomes effective.
The two lawyers have unknowingly participated in the registration of a fraudulent deed.
Shortly after closing, the real Owen Owner returns to Toronto and finds Peter Purchaser living in the home, claiming he owns it. Peter has spent $75,000 on a down payment and $50,000 in renovations.
This scenario is not far-fetched. It has actually happened.
Under Bill 152, the deed to Peter Purchaser is cancelled and the real Owen Owner gets his title back. So far so good — for Owen Owner.
Peter Purchaser, of course, is in trouble. He, too, is an innocent victim of the scam.
Willingly or not, Peter moves out and applies for compensation to the Land Titles Assurance Fund.
Judging from its past practice, it could take the fund two or three years and tens of thousands of dollars in legal fees to get his down payment back.
He may well have to absorb the legal fees he spends in the process, along with his renovation costs.
Meantime, Tony, the fraudster, disappears. Peter Purchaser, having lost the house, stops paying the mortgage.
Click here for the whole article
Bob Aaron is a Toronto real estate lawyer. Send questions to Title Page, New in Homes, The Toronto Star, One Yonge St., Toronto, M5E 1E6, or by email to bob@aaron.ca or fax 416-364-3818. Visit the website http://www.aaron.ca.
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