Aug 1 | 2017

Is Your Cottage or Investment Property Vulnerable to Fraud?

Posted by:

Is your cottage or investment property vulnerable to fraud?While people may see the value of getting title insurance for their homes, it is equally important to title insure any property you own – a cottage, summer home or even an investment.

Fraudsters may target properties that appear vacant or are rented out, especially ones that are mortgage free, and can either illegally transfer the deed to themselves and sell it out from under you or take out a mortgage on it and escape with the proceeds.

In one instance, a young man decided to use some of his savings and invest in real estate. He purchased an investment property for $204,500.00, as well as an FCT homeowner title insurance policy. Two years after the purchase, he received a notice stating that the mortgage was in default and that the lender would be taking possession of the property. Confused, he went to a lawyer as he knew that his mortgage was in good standing. An investigation revealed that though the man’s original mortgage was not discharged, the title was fraudulently transferred from the insured homeowner and a mortgage in the amount of $165,000 had been registered on the title. Mortgage funds were paid to the fraudster, who was now nowhere to be found.

Luckily for the young man, he was protected by an FCT title insurance policy. We coordinated and retained a lawyer on his behalf, and ultimately paid out $12,548.09 in legal fees to remove the fraudulent mortgage from title and rightfully transfer title back. The young man was able to keep his investment property, while being spared the time, expense and hassle of having to defend himself against the fraud.

While it’s not feasible to prevent fraud from taking place, the easiest way to protect yourself is to purchase title insurance. It will ensure that you are able to defend and retain the title to your property without experiencing all the stress and the costs associated with it, in addition to protecting you from a host of other title and non-title issues.

Have any questions about fraud protection? Share it with us in the comments section!

Jul 21 | 2017

What We Can Learn From Toronto-Dominion Bank v. Currie

Posted by:

What we can learn about fraud from Toronto-Dominion Bank v. CurrieTo what extent will a private lender be bound by the actions of a mortgage broker working on its behalf?  Will Canadian courts deem the broker to be an agent of the lender?  Will this apply even to fraud committed by the broker?  Earlier this year, in the case of Toronto-Dominion Bank v. Currie, the Alberta Court of Appeal issued a decision on precisely these questions.

Currie was a private lender who used a mortgage broker, Fuoco, to handle some aspects of his mortgage lending business.  In this case, Fuoco arranged for Currie to lend $220,000 to the Craigs, and Currie provided them with a mortgage for their property.  The mortgage instructions stated that all communications regarding the mortgage were to be directed to “DAN CURRIE c/o Fuoco Holdings Ltd.”

Following a default on the mortgage, the Craigs arranged new financing with TD Canada Trust.  The bank’s lawyer wrote to Fuoco requesting a payout statement for Craig’s mortgage.  Fuoco prepared a payout statement for Currie to sign, showing a balance owing of $249,992.55.  For reasons that are not clear from the court’s judgment, Fuoco did not provide this figure to the bank’s lawyer, but instead provided a different payout statement, showing only $75,000.00 as being outstanding, and directing the payout funds be made payable to Fuoco.  Upon closing, the bank’s lawyer sent this amount to Fuoco, who escaped with the funds, never having provided a discharge of the mortgage.

The Court of Appeal had to decide which of the two innocent parties, Currie or the bank, should bear the cost of Fuoco’s fraud.  The Court concluded that, by using Fuoco’s services in his lending business, and allowing Fuoco to receive communications and prepare mortgage payout statements on his behalf, Currie had given Fuoco actual authority to act as his agent, and therefore it was Currie who had to bear the loss resulting from Fuoco’s dishonesty.

This case highlights some important considerations for mortgagees and their lawyers.  When acting for an incoming lender, lawyers should always ensure that they purchase title insurance.  What looks like a valid payout statement or discharge could later be challenged by the previous mortgagee itself. Even if, as in Currie’s case, the new mortgagee is ultimately successful, there can be considerable time and money spent on litigation.  Lawyers should also consider adopting the practice of insisting on having an executed discharge from any outgoing private lender in hand prior to closing.  This is already standard practice in some parts of Canada, and goes a long way toward reducing confusion and risk following closing.

While in this case, it was the mortgage broker who committed the fraud, there are other cases in which it was the lawyer or even the borrower. There are measures that brokers and borrowers can also take to ensure they are not involved in a fraudulent transaction.

Mortgage brokers can protect themselves from fraudsters by verifying all the information provided by their clients. For instance, it is a red flag if their salary doesn’t make sense for their stated occupation. Borrowers can ensure that they purchase title insurance so that their legal costs will be covered if they ever have to defend their title. It will also protect them from a host of other issues such as survey or title defects.

Everyone involved in a real estate transaction has the responsibility to protect themselves from fraud.

How do you make sure that you’re protected? Share it with us in the comments section!

Apr 19 | 2017

How can you Mitigate Real Estate Fraud?

Posted by:

real estate fraudMortgage fraud has quickly become the fastest growing crime in North America, most often affecting the institutions that lend money to individuals purchasing property.

The most common form of mortgage fraud involves fraudsters who acquire property and then artificially increase its value through a series of sales between themselves and an accomplice. A mortgage is then secured on the property based on the falsely inflated price.

FCT is dedicated to helping our valued lending partners protect themselves against losses inflicted by fraudsters. Since 2012, FCT has identified more than $401 million in suspicious mortgage transactions. A title insurance lender policy from FCT provides the ultimate protection and allows a financial institution:

  • the ability to protect its financial interests
  • to safeguard its reputation and business by easily mitigating risk associated with claims

We have created a list of fraud flags and tips to help you mitigate your risk of becoming a victim of mortgage fraud. Whether you are a bank branch lender, credit union lender, a mortgage broker or a mortgage specialist, these tips can help inform you of what to look for when processing a mortgage transaction.

For more information about how to protect you and your customers against mortgage fraud, please visit or contact your dedicated Business Development Manager.

Mar 7 | 2017

What You Need to Know About Real Estate Fraud

Posted by:

Real estate and legal professionals need to stay vigilant as criminals are getting craftier with real estate fraud today. We take fraud seriously at FCT and strive to combat it at every step in the process. We have a certified fraud examiner on staff specializing in early detection and protection. We also underwrite for it in our policies, and we defend our clients who fall victim to it.

March is fraud prevention month, so we’ve included a round-up of the real-estate scams to look out for:

  • Title fraud and forgery: The ownership or title of a property is fraudulently changed or documents are forged to allow a fraudster to illegally sell or refinance the property.
  • Mortgage fraud: A mortgage is obtained from a lender under false pretenses. This is also known as application fraud.
  • Value fraud: A lender is led to believe a property is worth more than it really is through conceareal estate fraudlment or intentional misrepresentation of the property’s attributes and value.
  • Foreclosure Fraud: A homeowner in default on their mortgage is deceived into transferring their property title either in exchange for a loan or for assistance with their mortgage. The fraudster imposes payments that are not sustainable for the homeowner and they end up losing their property and equity along with it. The homeowner’s payments are not used to pay off the mortgage and the fraudster can resell or remortgage the home.
  • Shadow flipping: A realtor or investor sells the same property multiple times at increasing prices before the initial sale closing date. The initial seller ends up making less while the last buyer pays an inflated value for the property.

While you cannot prevent fraud from occurring, you can protect yourselves and your clients by carefully reviewing the details of all your deals and by following our recommended best practices.

The best way to protect against title fraud is to get both an owner and lender title insurance policy from FCT.

With a title insurance policy, owners can rest easy knowing their title will be defended in the event it is ever challenged* and they will be protected from other issues like survey and title defects. Lenders will be protected against losses associated with the priority and enforceability of the mortgage, title and survey defects, municipal issues as well as title fraud. Lawyers can rest easy knowing that all parties are protected and FCT has their back in the event of fraud.

Have you come across any fraudulent transactions lately? Tell us about it in the comments section below!

* Insurance by FCT Insurance Company Ltd. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request.  Some products/services may vary by province. Prices and products/services offered are subject to change without notice.

Jan 26 | 2017

Fraud is Alive and Well in B.C.

Posted by:

Fraud in B.C.I am sure by now many of you have read the Fraud alert: Notices to the Profession published by the Law Society of B.C.  And for those of you who have not, click here for the link.

So as a legal professional, what can you do to protect yourself and your clients from the devastating effects of fraud?  In addition to the tips provided in the Law Society’s publication, as an expert in detecting and deterring fraudulent real estate transactions, FCT has compiled a list of best practices to assist in avoiding fraud:

1. Whether you are acting for a vendor or borrower, always insist that the balance of the proceeds are made payable to the registered owners after payment of secured creditors, taxes, legal fees, bank loans, credit cards, etc. and not to third parties. If the borrower or vendor owes money to a third party that does not appear to be related to this transaction, they can deposit the balance of the proceeds into their bank account and cut their own cheques. In most fraudulent transactions, funds are made payable to third parties, which allow the fraudsters to quickly negotiate the funds and disappear.

2. Be wary of very quick closings where you do not know or have never acted for your clients.  Most fraudsters go to solicitors/notaries who do not know them and hope to pull off the fraud quickly.

3. Question transactions being signed under Power of Attorney.  Why is the Power of Attorney being used and can you contact the Donor?  Review the Power of Attorney carefully.

4. Read your lender client’s mortgage instructions carefully and ensure you comply with their fraud requirements.

5. Get title insurance for both your lender and purchaser clients in order to protect them from the devastating effects of title fraud.

If you didn’t have the opportunity to attend one of our fraud seminars, you can still view it online and obtain CPD credits, by clicking here.

Have you come across any fraudulent transactions recently? Please share your stories with us.

Mar 8 | 2016

FCT is proud to be a fraud prevention month partner

Posted by:

fraud2016 marks the 12th anniversary of Fraud Prevention Month in Canada: an annual education and awareness campaign aimed at helping Canadians recognize, reject and report all forms of fraud. FCT is proud to join forces with the Competition Bureau as one of this year’s fraud prevention forum partners.

As part of this campaign, FCT will be hosting a variety of fraud-related events throughout Canada to help spread the word and educate our partners. This will include our 2016 FCT Seminar Series which offers 10 coast–to-coast accredited presentations focused on real estate fraud. During these seminars we will provide attendees with:

  • Regional-specific content
  • Expert insight to the industry
  • Fraud statistics
  • Real-life residential and commercial claims stories
  • Red flag detection strategies
  • Protection solutions using title insurance

Stay tuned for dates and registration information.

FCT has a powerful weapon against fraud

And her name is Marie Taylor.

As a Certified Fraud Examiner with the Association of Certified Fraud Examiners, Toronto Chapter, Marie is a sought-after subject matter expert specializing in residential title insurance. This association is the world’s largest anti-fraud organization and premier provider of anti-fraud training and education.

In fact, having Marie on the FCT team gives us the enviable edge of being the only title insurer in Canada to have a Certified Fraud Examiner on staff — a highly trained specialist that can spot the red flags and suspicious activity that most would overlook. This means that fraudsters know better than to mess with FCT, and that our customers can rest assured they are in good hands when it comes to protecting themselves and their clients against the consequences of real estate fraud.

Don’t be a victim: arm yourself against fraud with help from FCT

Have you or one of your clients been a victim? Tell us your story by commenting below. Or better yet, share your story in person at one of our upcoming fraud seminars.

Until then, remember when it comes to fraud, trust your instincts . . . and trust FCT to have you covered.

Mar 4 | 2016

Lin vs. CIBC and the value of title insurance in British Columbia

Posted by:

Blog_HomeOwner_Thumb_LockThe case of Lin vs. CIBC has been stirring up a fair bit of interest in the B.C. legal community recently, not only because of the precedent it set, but also due to the fact that according to the Lawyer Herald website, it has now grown into an $8 million fraud case.

This case is very important because it helps answer the question which innocent party bears the loss when mortgage funds are stolen.

According to the Herald, the trouble began in 2013 when Agatha Chung was hired by Hsui-Wen Lin and Min Sheng Tang to refinance a mortgage in the amount of $520,000. These funds were to be used to pay off their existing mortgage at a different institution as well as certain small unsecured debts, with the balance going to the borrowers. Lin and Tang applied for a loan from CIBC and the transactions were managed by CIBC’s lawyer along with Chung acting for the borrowers. However, once CIBC paid the funds to Chung, she vanished along with Lin and Tang’s money. What came next was to decide who actually held that loss: Lin and Tang or CIBC?

In the trial decision, Supreme Court Judge John Steeves ruled that CIBC’s mortgage was invalid, despite the fact that it was properly signed and registered.  The trial court decision was upheld by the B.C. Court of Appeal on December 18, 2015.  The Court of Appeal specifically upheld the ruling that CIBC’s mortgage was invalid on the basis that the borrowers received no consideration for the mortgage and that the money still belonged to CIBC at the time it was stolen.  For more on this case, you can read The Vancouver Sun article Notary fraud case causing legal waves in B.C. courts.  

The growing problem of real estate fraud

Through the course of my day as legal counsel at FCT, I see —first-hand — that fraud continues to be a growing problem in Canada. I can tell you that fraudsters come in all shapes and sizes and from all walks of life. And although it is not overly common for legal counsel to be involved in fraudulent transactions, it does happen, as in the case of Lin and Tang. While title insurance can’t protect you against becoming a victim of fraud, it can and does protect you after the fact by minimizing the financial impact and stress associated with this type of crime.  FCT’s lender policy covers, amongst other things, losses arising from “the invalidity or unenforceability of the insured mortgage upon the title” which is exactly what happened to CIBC in this case.

And it appears that the Law Society of British Columbia agrees.

A recent Practice Resource distributed by the Law Society of British Columbia in February of this year supports FCT’s view on the importance of title insurance during real estate transactions in British Columbia. In response to the Lin v. CIBC ruling, the Law Society recommends five points to safeguard lawyers and their lending clients, including point number four (4), which reads:

  1. Consider whether to recommend closing of certain transactions with title insurance or through some other mechanism, such as escrow, that will protect your client.

I can’t tell you how happy it makes me to see this in print! After years of promoting the benefits of title insurance across the country, it’s very rewarding to know that others in the Canadian legal community also see its value and are recommending it as an aid in the fight against fraud.

Speaking of fraud, as we enter Fraud Prevention Month, I invite you to take part in FCT’s fraud chat on Twitter taking place on March 31st, 2016 featuring our very own certified fraud examiner, Marie Taylor. Plus if you have any fraud tips or stories you’d like to share, please do so by commenting below.

Oct 29 | 2015

Zoomers and real estate fraud

Posted by:

FCT educates and helps to protect existing homeowners aged 45+
at this year’s ZoomerShow

Ahhh, retirement: the so-called “golden years” when we embrace a slightly slower pace and strive to live each day to the fullest. Retirement, whether it comes at the traditional age of 65, at an early 45 or much later in life, is a time when most of us look forward to pursuing interests and hobbies, as well as spending time with family and friends. It is the dream that gets many of us through the years of clock punching, commuting and piled-on responsibility.

But sadly the new reality for Boomers/Zoomers is that retirement now brings with it the added risk of real estate fraud.

Boomers and Zoomers are more susceptible to real estate fraudzoomer small

Many retirees have worked a large portion of their adult lives to pay off their homes and fulfil their dream of being mortgage free. However, this accomplishment now presents a new set of challenges. Owning your home free and clear of a mortgage makes it very attractive to fraudsters: that growing group of unsavory individuals preying on retirees for their own criminal gain. As a result, the “dream” of retirement has become more of a nightmare for some, accounting for between $400 million and $1.5 billion in real estate damages annually.

In a previous post on The FCT Blog, we explore the different kinds of real estate fraud, which you may find interesting. Knowing the signs is your best line of defence.

But what makes real estate fraud all the more tragic is that of all fraudulent claims received by FCT every year, about one third are committed by someone the victim knows — usually a family member, caregiver or renter. Plus if you’re widow that lives alone or a Snowbird that is away for extended periods of time, you tend to be at an even higher risk. The same is also true for those with diminished mental capacity, who are sadly, more vulnerable than most. A great “EVERYTHINGZOOMER.COM” article that explores this topic more in depth is called, Seniors More Vulnerable to Mortgage Fraud and is worth a read.

A cautionary Snowbird tale

A retired homeowner named Joseph* left for his annual trip to Florida to ride out in the winter under sunnier skies. His home was left vacant. Only a select few friends and acquaintances knew of his plans, including this lawyer and a realtor that was familiar with the family. Sadly, both unscrupulous, the lawyer and the realtor saw the opportunity presented by Joseph’s absence and took it. Together they colluded to transfer the title to Joseph’s property to themselves and obtain a large loan for the entire value of the home. They then discharged the mortgage fraudulently and sold the property to a new family who had no knowledge of the crime they were now a part of.

Joseph returned in the spring to find a new family living in his home — he’d lost the largest investment he owned and worked for decades to pay off. Joseph was now homeless and in dire financial straits. Luckily his title insurance policy helped to rectify the situation and got him back on title and paid the legal fees involved in defending his claim. But most importantly, his coverage helped get him back into his home. The new homeowners that hadn’t purchased a homeowner policy, weren’t so lucky . . . .

* Some details have been changed to protect the privacy of those involved.

Make sure you’re protected

Fraud can happen to anyone, at any time. However, if you are a target, having the right protection in place can help minimize the impact, not to mention the stress and financial consequences.

Look for us at booth 513 in the lifestyle section at this year’s ZoomerShow, October 31 and November 1 taking place at the Enercare Centre in Toronto. FCT staff will be on hand to answer all your questions about how you can protect your existing home, both now and well into retirement. Plus you can even purchase your own title insurance right on site and leave the show knowing your biggest asset is well protected. Hope to see you there!

Are you a Zoomer with a title insurance question but can’t make it to the ZoomerShow? Use the comment section below to learn more.

Oct 26 | 2015

Title insurance and the case of the trick and the treat

Posted by:

halloween_smallHow title insurance protects against the evils of fraud

Fraud, in all of its forms, is a growing common problem in North America. And the real estate industry is no exception. FCT continues to pay out more as a result of title fraud than almost all other claim types. As mentioned in our previous blog post entitled The scary truth about title fraudFraud is a horrible crime with very scary consequences — both emotional and financial — for its victims.

The tale

Imagine this: a young man named Steven* worked hard for years to accrue significant savings, which were diligently put aside while looking for the best way to invest. After much thought, Steven decided to use the bulk of his savings and invest in real estate — what he and his advisors thought to be a safe bet. He purchased an income property for $204,500, and on the sage advice of his lawyer, an FCT homeowner title insurance policy as well.

The trick

Two years after the purchase, a notice was delivered to the property stating that the mortgage was in default and the lender would be taking possession of the property. Confused, Steven sought counsel as he knew that his mortgage was in good standing: he had never missed a payment! Was someone playing an evil trick? Or was it simply a mix up? Steven was beyond stressed, worrying about his investment and his credit rating.

Upon investigation it was revealed that the title had been fraudulently transferred from Steven as the insured homeowner and that the accompanying files did not contain any identification, nor any signed documentation. A new, fraudulent mortgage in the amount of $165,000 had been put on the property, paid to an unknown individual who, along with the funds, had disappeared into thin air . . . .

The treat

Luckily for Steven, he was covered. Because his lawyer had a thorough understanding of title insurance and recommended Steven purchase an FCT homeowner policy to complement the mandatory lender policy, he had comprehensive coverage to fall back on.

FCT paid out $12,548.09 in legal fees to remove the mortgage from title and transfer the rightful title back to him. Steven was able to retain his investment property, while being spared the time, expense and stress of having to defend his himself against the fraud. A huge treat indeed!

Don’t be a victim

We say this time and time again, but it bears repeating — you don’t have to be a victim of title fraud. FCT is your best line of defence against fraud and offers you:

  • Simple, effective title insurance solutions;
  • The best underwriters in the business; and
  • A certified fraud expert on staff.

To learn more about how to treat yourself to the peace of mind that comes from knowing you’re protected against the tricks of today’s fraudsters, comment below or contact us at one of the following numbers:

Homeowners call 1.877.888.1153
Lawyers call 1.866.804.3122

*Names and specific details may have been changed to protect the privacy of those involved.

Mar 24 | 2015

Property fraud: a cautionary tale, Hollywood style

Posted by:

For ages our society has loved to paint landlords as somewhat evil — individuals that use and abuse their power and position over their helpless tenants.

But recall the 1990 thriller, Pacific Heights, staring a young, fresh Melanie Griffith and a handsome Matthew Modine as a couple terrorized by a conniving and twisted renter, Carter Hayes, played so convincingly by Michael Keaton. Carter never pays any rent, drives the other tenants away (by breeding cockroaches, no less!) and systematically ruins the lives of his landlords, as well as racking up their credit card bills.

landlord-smallAlthough fictional, Pacific Heights offers a cautionary — albeit over-the-top — tale illustrating the perils of property fraud.

In an economy where the average home price in Toronto exceeds the one million dollar mark, it is increasingly common for real-life homeowners to use income from tenants to pay down their mortgages or earn additional income. It can also prove fertile ground for fraudsters.


Just ask Calgary landlord Rod Faulkner:

“In the 12 years, people have scammed me in just about every way imaginable,” says Faulkner, who owns 12 Calgary revenue properties. “And every time I get scammed, it costs me money, and I learn a new lesson.”

In the 2012 online article entitled Avoiding property fraud 101, writer Peter Mitham paints a grim picture:

Regulators in each province track mortgage-and title-related fraud, and Better Business Bureaus track other types, but mortgage-related fraud alone regularly tops $300 million a year in Canada. When frauds of all types relating to real estate are factored in, the tally is easily more than $500 million annually.

No one wants a tenant from hell like Carter Hayes in Pacific Heights. If you’re looking for a Hollywood ending to your rental story, below are some practical ways to protect yourself and your investment when renting:

Consider redirecting your mail
If possible, do not have tax bills, credit card bills, bank statements or any other financial information sent directly to your home. Instead, consider getting a P.O. Box, or having the documents sent electronically to a private, secure email address or access documents directly through your financial institution’s portal.

Remove or secure all financial information on the premises
If you are sharing accommodation with a renter, remove old income tax files, property tax records and other bills from the premises. A locked cabinet drawer will not deter a savvy fraudster. Keep the documents in a secure off-site location.

Do ALL security checks
Police criminal record checks and credit checks are worth the nominal fees for the information you gain. Call all references provided, but take their recommendation with a grain of salt: they may be in on any potential scam. Another great way to learn more about your prospective renter is to search their online profile. You’d be amazed at what you can find with a simple Google search! And above all, trust your instincts.

Know your neighbours
Take the time to introduce yourself to your neighbours who can be your eyes and ears when you’re not around.

Get title insurance
Remember fraudsters are getting more and more savvy all the time and although there is no such thing as a 100% guarantee against fraud, title insurance can help greatly mitigate your overall risk. You can learn more about the benefits of title insurance online at

A recent Toronto Star article, How Ontario landlords can avoid bad tenants outlines additional tips that you may also find interesting.

Know any good landlord or tenant horror stories? Share them here.