Can a Home be Sold Without the Owner’s Knowledge?

by Kristian Tzenov, RECA Stakeholder Engagement Manager

Recent incidents of fraudulent activity in Ontario where homes were sold without the homeowner’s knowledge, have been a hot topic and serve as a good reminder for Alberta licensees not to let their guard down or skip steps when identifying clients.  

In one case, a property management brokerage chose a rental tenant for their client who was later discovered to have used fake identity documents, along with bogus references, neither of which were verified by the brokerage. These fraudsters originally posed as tenants, only to later impersonate the homeowner and attempt to sell their home.  Do you really know who your clients are?  

Licensees must verify their client’s identity, yet simply obtaining identification isn’t where this process should end. Watch out for any client red flags. Red flags can be difficult to spot if you haven’t taken the time to get a good understanding of who your client is in the first place. Remember, building strong client relationships can help to combat fraud.  

Additionally, licensees should take diligent care in situations where a Power of Attorney is involved, and it is not the homeowner themselves looking to sell a property. Be sure to use your best effort to confirm the validity of the Power of Attorney, including ensuring it is within the scope of their agreement to sell the property on the owner’s behalf.  Copies of the Power of Attorney should always be requested and retained.  

Potential Red Flags 

• incorrect or inconsistent spelling of a client’s name across multiple documents  
• employment references listed for companies that cannot be found online or have no website  
• personal reference’s phone numbers are the wrong number or for out-of-service numbers 
• clients unwilling to meet in-person

The Importance of Title Insurance  

Fraud can occur even when proper “know your client” procedures are in place. The most diligent industry professionals may still fall victim to experienced fraudsters using sophisticated tactics. Title insurance can provide additional protection and reassurance. 

Title insurance is relatively inexpensive and protects the policy holder against most losses associated with title fraud and other title-related issues, including challenges against ownership.   

Buying a home is often a person’s most significant investment. Licensees should consider advising their clients to investigate the benefits of title insurance as a safeguard in the event their ownership rights are ever challenged. Title insurance is available from a variety of third-party insurance companies and typically covers the legal fees and other costs related to restoring title in cases of real estate title fraud. In fact, even homeowners who did not initially obtain title insurance when they purchased their property can still purchase a policy at any time.  

Are you doing everything you can to get to know your clients?  

Do you advise your clients to consult with their real estate lawyer about the benefits of title insurance? 

What procedures do you use to verify your client’s identity?