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Identity Thieves Steal Homes
westcoaster004 writes "Identity thieves in Canada have begun targeting the homes of their victims. Recently, several cases of mortgage and title fraud have involved identity theft; several individuals have had their houses sold without their knowledge. Ontario's land-registry system does not currently protect homeowners from such fraud, but instead favors banks, mortgage companies, and purchasers. The provincial government is however working to solve the problem."
This isn't new, it's been going on for at LEAST 3 years.
I know because I was reading up on it when I bought my house 3 years ago.
RTFM. This was a rental. The owner has his own hose a few kilometers away.
This type of fraud (a rogue purchases property from an innocent vendor, flips it to an innocent buyer, then absconds with the money, leaving the property with unclear title) has been around at least as long as there has been the law of contract. The legal doctrine is one of "Mistake". Here is a more recent case from the U.K. about Mistake in contract, invovling a similarly fraudulent transaction, but with a car instead of a house: Hudson v. Shogun [2001] EWCA Civ 1001.
A choice quote from that British case: "It may seem remarkable that the law governing the consequences of a fraud as common as this is still in doubt, but it is." This would apply to all of the jurisdictions deriving their law from British common law, including Australia, Canada and the U.S.
Here is an American viewpoint (the Law Site on MSN) on the issue of Mistake
I'm a real esate agent in the US. I don't think that scam would be as easy to carry off here. Loan companies have less power and would probably be out of luck. When people default on loans here the loan companies often have to work for over a year to get title to the home and resell it. It is so expensive for them that they will often sell a home with a poorly performing loan at a steep discount just to get out without paying all the legal fees. The details vary from state to state.
Even if a homeowner found themselves in this situation, instead of petitioning a central government agency (which has now power except to record deeds), they'd have a ton of private parties exposed to the transaction to sue, including private title insurers, covering the owner's interest in the property, a meaty legal target indeed.
In Canada, they changed something in the Laws during the early 1990's that basically legalized the purchase of stolen property, if the property is purchased thru a legit registered business.
The typical case would be a victim of robbery that kept all receipts in a safe at the bank, then noticed some of their stolen goods lying in a pawn shop shelf. They would then notify the the police, receipts and other proofs in hand, but would meet resistance from the pawn shop owners. Anyhow, in most cases, the most valuable merchandise was already gone and could not be traced. As I recall, pawn shop owners felt that the Law shafted them by forcing them to return stolen goods to their rightful owner, after already handing money in exchange. What did Canada do? They changed the Law. Once a pawn shop has paid money in exchange for some valuables, they legally own them, even if you can prove that they stolen goods that belong to you.
A friend in Montreal lost a whole recording studio worth of equipment that way, right after the law was changed. Showed up in various pawn shops, noticed that the serial number of serveral items there matched those of material declared as stolen to the police a week before... only to hear the police say that he could not recover them, because the Law protects pawn shop owners and tramples the rights of stolen property's rightful owners. his story made the evening news in Montreal, back then.
So, however grossly unfair as this story about stolen houses might be, it remains consistent with Canada's position of protecting the buyer, in total contempt of victims of criminal acts such as property title theft or robbery.
For what it's worth, I think that proper remedy would be to:
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Disclaimer: just a puny US real estate agent.
:-)
It doesn't help anyone if we throw around terms like "mine" and "yours" when dealing with real estate. I only know basic US real esate law. The idea of "it's my house" is intuitive. It is also false. (here)
Land is scarce, especially land in proximity to other desirable land. When you "have title," I emphasize, "have title" to land, you have certain rights over that land, possession, enjoyment (use in any legal manner), control, exclusion (keep others from entering), and disposition (transfer interest). You also have rights to the air above, ground beneath, and rights to use adjacent bodies of water.
Because land is so scarce, it is valuable, and these rights are partitioned in all kinds of ways. The rights are not only sold piecemeal, groups of the rights can be divided piecemeal between multiple people with different kinds of transfer abilities.
And have I mentioned various kinds of leases and wills?
One of the functions of local government is to maintain a database of who has title to what land in a given area. But these rights can be partitioned with such complexity that it is a serious undertaking to answer the question of exactly who has which land interests on a given parcel, which may itself have been divided!
So what is the local government to do? They maintain a database of "deeds". Deeds are contracts which transfer rights from one party to another, or correct errors (spelling anyone?) in previous deeds.
In other words, title is determined by examining a natural language log structure filesystem. Futhermore, the records in these databases only go back, what, 60 - 100 years? You think you own your home, but there may be a valid legal interest infringing yours.
Do you see why you need title insurance?
My intution is that they tried to simplify things in Canada. The simplification was probably to "clarify" ownerships by giving the government more authority to assert exactly who has title. This "favors" the mortagage company in these exploited cases. I think the intention was to reduce risk for everyone involved. Inadvertently they have introduced a legal vulnerability.
And you thought your OS vendor was a little slow to respond.
You'd have to find a property without a mortgage AND find someone willing to buy the property all cash without running a title search (basically a senile or stupid person) because if a mortgage company gets involved they will want a full abstract with a chain of title going back 60 or so years making this sort of fraud impossible.
Furthermore you would have to find someone with hundreds of thousands in cash who is gullible enough to by a home without running a title search elderly folks are a possibility but in my experience when it comes to real estate purchases/sales most elderly people lawyer up very quickly for even the smallest transaction so you'd have a hard time pulling that off as well.
I think the invisible hand of the market has its middle finger extended
--A wise old fart named SC0RN
The guy that was living there is the person suspected of fraud. You'd know that if you had read the very short article.
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It isn't hard to feel bad for the bank. Not at all. Here in the States we have title insurance and the title agencies are tasked with ensuring that everything is in order. If the institution screws up, the *institution* is on the hook. Considering they have the power and resources to do due diligance and verify information carefully, this is the correct answer.
Amazing how much more careful an instutition is when they are on the hook rather than being able to say "oops, we didn't notice that nobody involved actually owned this: now give us our money anyway".
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Who came up with the idea that they should let someone else sell your home as long as they can successfully trick the buyer? Whoever it was, they should be shot.
Ah, but you forget that there are two victims here - the seller and the purchaser. Let's say you buy a house for $400,000, and you take out a mortgage for $300,000. You also plow $50,000 worth of renovations into it. The paperwork checks out, everything is fine and your family settles in.
You've been living there for two years, and then one day someone claiming to be the real owner shows up and tells you to get the hell out of his house. Turns out he's right - this is/was his rental property. His long-gone tenants forged documents and sold the house, pocketing the $400,000 and running away. What happens to you? Your mortgage was legal, so if you get kicked out you're still on the hook for $300,000, not to mention the $100,000 of your own money that you essentially gave away. What if the owner refuses to cover the $50,000 in upgrades? Now you're out $450,000 and you're living out of your car. Not to mention legal fees, delays etc...
Title insurance may ease the financial pain, but it still remains that two people have a claim to own the house, and one of them has to lose. That's why it sucks.
On another note, Canadian law outside of Quebec is based on English common law.
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I am glad that I live in America, where we at least retain some of the more important aspects of English common law...
Except for habeas corpus. And there is that eminent domain thingy, too...
Who came up with the idea that they should let someone else sell your home as long as they can successfully trick the buyer?
In a free market, like we have in Canada, no one needs permission from anyone to sell something that is legally theirs. So "they" don't "let" anyone sell anything. We have a legal right to sell what is ours. The whole purpose of this fraud is to create the appearance that the property legally belongs to someone who does not in fact own it.
Whoever it was, they should be shot.
God bless America.
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I know America bashing is fun, and yes, in may ways we've become a corporate state, BUT, in this case you would never be able to get away with this under U.S. law. The title company would be entirely on the hook - in fact, it's why we have title companies, and why they make so much money - to pay for the times when they screw up and allow this sort of thing. Somehow the title companies in canada have lobbied they gov't to provide them with legal protections for risks that they are being paid to take. It happens here too, but just not in this case.
THE YEAR WAS 2081, and everybody was finally equal...
No I've not. First of all, the seller is not a victim at all. He's a crook.
I can only think that the OP meant the (rightful) owner - clearly the seller is a crook, but he's right, there are definitely two victims in this. More, if the purchaser has a family.
But that requires that someone occupy (possess) the property adversely, exclusively and openly for several years without any action taken by the rightful owner.
I believe that here in the UK (at least), the colloquial name for that Squatter's Rights. A quick google suggests that the required period is around 12 years.
It's official. Most of you are morons.
You buy it at the closing, the attorney usually manages it. If you see title insurance in your closing costs, it's likely "lender's title insurance". You need "owner's title insurace". You could buy it later, but it costs a lot more.
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