Is Your Cottage or Investment Property Vulnerable to Fraud?
Aug 1st, 2017 | By FCT
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!