On May 11, 2022, a 2 bedroom unit in the Aura condos at Yonge & College was listed for sale on MLS for $978,000.
In just 9 days, the unit was sold for $970,000.
The transaction looks perfectly normal on MLS.
The seller and buyer each have their own agents and lawyers.
The buyer got a mortgage from the Bank of Montreal and ownership was transferred from the seller to the buyer on June 15.
It was a done deal.
Two months later…
The true owner suddenly showed up and said she had never tried to sell her condo.
What happened?
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The original owner was an international student from China.
She bought the unit for $868,000 in 2017.
With her international student status, it’s unlikely that she could get a mortgage.
So it was most likely a cash purchase.
Two years later, in 2019, she moved back to China and just left her unit vacant.
The unit stayed vacant for around 3 years.
In 2020, a thief gained access to the vacant home.
The thief was able to fake the identity of the owner and found an agent to represent her to sell the property.
The unit was staged for professional photographs and listed on MLS for sale.
The thief was even able to fake it all the way through the lawyer to complete the transaction.
Title was transferred to the new buyer and the thief ran away with over $900,000 in the pocket.
The buyer closed the transaction with a mortgage from the Bank of Montreal.
It appears that the buyer might be an end-user and moved into the unit because the unit was never put up for rent.
That was June 2022.
A month later, the original international student owner found it odd that she didn’t get charged for the July condo fees.
So she asked her real estate friends in Toronto to check things out.
She then found out that her unit was sold to someone else.
She totally freaked out and called the police.
In this case, both the original owner and the buyer are victims.
So now, who is the legitimate owner of the property?
The original owner?
Or the new buyer?
Because it was a fraudulent transaction, the title will go back to the original owner.
And this is where title insurance would kick in.
The original owner’s title insurance would pay for all the legal expenses to re-establish her title to the property.
What about the buyer?
He paid all that money to buy this property.
Unfortunately, he would need to move out of his new home.
But at least he would be able to get his money back through his title insurance.
It can take considerable time, money and effort to resolve the whole situation and get the title restored.
To this date, 6 months after the incident, the title still hasn’t been restored yet.
Even though title insurance protects you from financial losses, it is obviously still a lot of trouble and stress when a title fraud occurs.
So is there anything else you can do at all to protect yourself from title fraud?
Definitely.
You can put a charge on your property.
It can be a mortgage or a line of credit.
A charge is a big de-motivator for the thief to steal your property.
Why is that?
Let’s say you only paid 20% down to buy your property and the remaining 80% came from a mortgage.
Now if the thieves were to sell your property, they would have to discharge the mortgage first.
So they only get 20% of the money into their pocket, not 100%.
You see, that’s a huge difference from stealing a mortgage-free property.
Besides, to discharge a mortgage, the thieves may have to provide fake identity and documents to the bank as well, it is just more trouble for them.
More trouble, a lot less money?
Or less trouble, a lot more money?
That’s a no brainer, right?
That’s why title frauds typically only happen with fully paid-off properties.
Just like in the story I just shared, international student owned property with no mortgage.
And it was vacant too, a perfect target for title fraud.
Like I always say, a mortgage is a good debt to have.
Get money to do all the hard work for you, make more money with your money.
And you get the title fraud protection as a bonus.
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