Real estate fraud in Ontario generally includes “mortgage fraud” (e.g.
fraudsters acquire a mortgage fraudulently through false information or
identification and run away with the money, leaving the true home
owners with a significant liability) and “title fraud” (e.g. fraudsters
use stolen identity or forged documents to transfer a registered
owner’s title to him or herself without the owner’s knowledge). If you
are a victim of real estate fraud, there are a number of legal options
which may be available to you.
Title Insurance Coverage:
First,
you might be able to make a claim to your title insurance company under
your policy. Have a lawyer review your policy to determine whether your
claim would be eligible for coverage. Claims should be in writing and
include your policy number, contact information, and all relevant
documents related to your claim. Claims should be submitted as soon as
reasonably possible. If your claim is covered, then the title insurance
company may (depending on the policy):
* pay your actual loss and out-of-pocket expenses;
* pay the amount required under the policy;
* prosecute or defend a legal proceeding related to the claim (and pay for doing so);
* negotiate a settlement of any claim; and
* pay for rent until you can live on the property or the claim is settled.
It
is important to note that, once your title insurance company assumes
the claim, your rights are transferred and you will generally have no
recourse against that company for failing to pursue your rights or if
amounts are not recovered.
Civil Action:
Second, if coverage
under your title insurance is not available, you may be able to sue the
alleged fraudsters in civil court for, where applicable, deceit,
conspiracy, and unjust enrichment (among other things). To establish
deceit, there must be proof of fraud as demonstrated by a false
representation made knowingly, without belief in its truth, or
recklessly and carelessly as to whether it is true or false. The motive
of the alleged fraudsters is immaterial. If two or more fraudsters are
involved, then the tort of conspiracy by unlawful means may apply.
Here, there must be an agreement or combination between two or more
persons, a predominant intention to injure you (or unlawful conduct
which the fraudsters knew would likely result in injury to you), and
actual injury or damages suffered by you. Finally, a claim for unjust
enrichment may be available. An unjust enrichment exists where there
has been an enrichment or conferral of a benefit to the fraudsters,
coupled with a corresponding deprivation to you, and no juristic reason
for that enrichment. If a court finds that wrongs have been committed
it may, among other things, award damages and legal costs and rectify
title to the rightful owner.
Criminal Prosecution:
Third, you
may consider contacting the police to have them lay charges against the
fraudsters and prosecute them in criminal court. Where applicable, the
police may charge the fraudsters with fraud, criminal theft, forgery,
uttering forged documents, and possession of property obtained by
crime. These are all very serious charges, all of which carry maximum
penalties of up to 10 years imprisonment (with the exception of fraud,
which carries a prison term of up to 14 years in certain cases).
Fraud under the land registration statutes:
Fourth,
real estate fraud offences committed under the Land Titles Act, R.S.O.
1990, c. L.5 or the Registry Act, R.S.O. 1990, c. R.20 carry fines of
up to $50,000 for individuals ($250,000 for corporations) or
imprisonment of up to 2 years, or both. A court imposing such penalties
may also order the fraudster to pay compensation or make restitution.
Ontario Land Titles Assurance Fund:
Finally,
the Ontario Land Titles Assurance Fund (“LTAF”) is a government fund
designed to compensate people for certain financial losses due to real
estate fraud. There are currently two procedural tracks that apply to
claims made to the LTAF: (1) the traditional process for claims arising
before October 19, 2006 and (2) a new earlier payment process for
claims arising on or after October 19, 2006. October 19, 2006 is simply
the date that new amendments were introduced to the Land Titles Act
which created the two-track system.
In cases of fraud that
allegedly occurred before October 19, 2006, the traditional process
must be followed. Here, the LTAF can only be turned to as a fund of
last resort. The LTAF can cover clear financial losses and reasonable
legal fees where a judgment has already been made and/or rectification
has been ordered. To be eligible to apply to the LTAF, you must
commence your claim within 6 years of the date of the alleged fraud.
There are a number of rules concerning eligibility, such as the
requirement that you must have tried other avenues (e.g. criminal,
civil, title insurance, etc.) to rectify the fraud before applying to
the LTAF. You will not be entitled to recover out of the LTAF if (among
other things) your negligence caused or contributed to the loss or if
you knowingly participated or colluded in the fraud. After a claim is
made, it will be assigned to a hearings officer for investigation. You
may be asked for additional info or documentation to help clarify the
claim. If compensation is not paid out directly, hearings may be held
by the Director of Titles to determine if you have met the requirements
for compensation and how much you will be paid. You will be notified of
the Tribunal’s decision in writing. That decision can be appealed to
the Superior Court of Justice within 30 days after the date of mailing
of the Tribunal’s decision; in the event of no appeal, no further
action will be taken by the Tribunal pending the outcome of the court
process.
For frauds that allegedly occurred on or after October
19, 2006, the new earlier payment process is available. This process is
available to homeowners and individuals who are purchasers, in good
faith and for valuable consideration of land used for residential
purposes. Importantly, this new process new makes the LTAF a fund of
first resort for eligible fraud victims where the loss is not covered
under a policy of title insurance. This means that applicants no longer
need to pursue their loss through other means (e.g. civil, criminal,
etc.) prior to being entitled to compensation from the LTAF.
Straightforward cases can be resolved (and title rectified) within 90
days of being reported where there is no court action and all parties
are cooperating.
Remember: if you believe you are a victim of real estate fraud, contact a lawyer immediately to discuss your options.
Disclaimer:
Please
note that the information provided herein is not legal advice and is
provided for informational and educational purposes only. If you need
legal advice because you are or believe you are a victim of real estate
fraud, you should seek professional assistance (e.g. make a post on
Dynamic Lawyers -
http://www.DynamicLawyers.com). We have Toronto,
Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers
registered to review your situation and advise accordingly.
ABOUT THE AUTHOR: Michael Carabash, B.A., LL.B., M.B.A.
Dynamic
Lawyers Ltd. was founded by Michael Carabash, a Toronto business lawyer
with Carabash Law. Virtually everyone has a wide range of legal issues
they need help with - such as writing a will, fighting a traffic
ticket, buying or selling real estate, writing a contract for services,
reviewing a lease agreement, having documents notarized or
commissioned, dealing with a motor vehicle accident, etc. Michael
wanted ordinary people in need of common legal services to be able to
conveniently and cost-effectively get answers and quotes from local
lawyers. At the same time, he also wanted lawyers to be able to market
their services directly and effectively to the public.
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