To print this article, all you need is to be registered or log in to Mondaq.com.
Unfortunately, in January 2022, this was a reality for two Toronto homeowners who were on an extended business trip and returned home to find their property had been sold to new owners. While the owners were away, two scammers posed as the owners, obtained fake IDs, hired a real estate agent, and sold the home to new owners. Those new owners took possession, and the true owners didn’t find out about the fraudulent transaction until they returned home months later.
Real estate agents, sellers, brokers, and lawyers, among other professionals and entities, are required to authenticate and record their clients’ personal information. Despite these requirements, people can still fall victim to these fraudulent schemes.
In a similar case, Reviczky vs. Meleknia et al.., 88 OR(3d) 699, a fraudster posed as a relative of Mr. Reviczky (the property owner) and acted under a fictitious power of attorney to sell the property to a buyer, who was another victim of the fraud. Mr. Reviczky filed a lawsuit against the innocent buyer and HSBC Bank. The innocent buyer admitted that his interest in the property was voidable. However, the bank maintained that it had a valid and executable mortgage on the property.
The court found that the deferred indefiniteness doctrine is consistent with key provisions of the Land Title Law and it is preferable to the other doctrine of immediate postponement. Under this theory, the party who acquires an interest in the land from the party responsible for the fraud is vulnerable to a claim by the true owner because the intermediate owner had an opportunity to avoid the fraud. In summary, the tribunal held that (i) evidence that a party dealt with a fraudster establishes that the party had an opportunity to avoid fraud, and (ii) having an opportunity to avoid fraud makes it in the party’s interest to avoid fraud. on land is voidable in favor of the true owner.
In this case, the bank knew that the person intending to sell the property was acting under power of attorney and had the means to protect their interests in this circumstance. The lawyer acting on behalf of the bank did nothing to examine the power of attorney, which would likely have prevented the fraud. As a result, the court determined that the bank’s charge was invalid.
One of the best ways a homeowner can protect themselves from something like this is by purchasing title insurance, which typically includes protection against forgery, fraud, and phishing.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought according to your specific circumstances.
POPULAR ARTICLES ON: Canada Real Estate and Construction