Fraudulent activity has escalated from the cheque writing scams to identity theft to actually stealing your home right out from underneath you.

For many unsuspecting homeowners there is fraudulent activity going on behind their backs that could cause them a world of aggravation and financial distress.

What most don’t realize is that title insurance could have prevented or assisted in correcting the fraudulent activity. There are two kinds of title insurance, one for the homeowner and one for the lender.

The following is an example of how this can happen.

Shortly after purchasing and moving into a recently remodelled resale home, what was to be some simple cosmetic changes turned into a repair and structural reconstruction, due to the previous removal of load-bearing walls and the replacement of improper support beams.

No building permits were obtained for the previous renovation, and thus there was no quality control by municipal building inspectors.

The homebuyers were quite relieved when they learned that their title insurance covered the cost to restore the home they purchased, not because of the poor workmanship, but because a building permit was never obtained by those who had completed the work.

This form of insurance indemnifies the property owner against issues that predate the policy inception.
For a one-time fee (that in many cases works out to less than the annual premium for an average homeowner’s insurance policy) title insurance protects the purchaser against anything that may hinder clear possession of the property.

This coverage exists as long as the purchaser holds title of the property for which it was purchased, and it will pass on with the property to family members, as in the case of an inheritance.

Title insurance is purchased when title of the property is conveyed. It is usually acquired through the lawyer handling the transfer of ownership, and actually may eliminate the need for thorough title searches.

The cost of title insurance will depend on the value of your home, if it is a new purchase, or if it is a refinance.

It is also ‘no-fault’ insurance so that if something arises, you simply make a claim, unlike the traditional process of having to prove negligence on the part of the lawyer conducting the searches. So, what does it cover?

Ensures ‘clear title’ of a property.

It would cover un-discharged liens or mortgages that may go back many years, or have been lost in the land registry system.

It will even cover fraudulent mortgages placed on a property unbeknownst to the property owner.


The average case of real estate title fraud costs the victim an average of $300,000. To compare, the average credit card fraud in Canada is $1,200.
A fraudster will typically do one of the following:

Forge the property transfer deed;

Register the title to the property in his or her name;

Forged a discharge of the home’s existing mortgage and then borrow against clear title.

Situations of unpaid taxes or utilities levied against the property could be covered.

Encroachments are a frequent issue.
For example, the past owner has built a shed, deck, pool or other addition on the property you are purchasing and it encroaches on a neighbouring property, or doesn’t meet municipal bylaw or setback requirements.

It also provides for any changes to a property where appropriate permits are not obtained. Situations like these can cost considerable amounts of money to rectify, even before the legal bills begin to pile up.

Title insurance will make the home purchasing process easier. Most of the major financial institutions accept title insurance in lieu of a survey.

It provides ‘gap coverage,’ which would come into play, for example, during a major power failure.

When conventional title searches and registrations are not possible, you end up sitting with nowhere to go. Those with title insurance can move forward and take possession of their homes. Any difficulties that may occur with title would be covered under.

Even if you already own your home and do not currently have title insurance, it would be well worth the phone call to your lawyer to investigate. Or contact me for further information.