stuff of nightmares

falsified or registered in other fraudulent circumstances. Depending on the evidence, your lawyer should now be able to determine how best to proceed in the short-term to preserve your rights.

If you need to go to court, time is not on your side. These initial steps should be taken as soon as possible. Hopefully by the time you receive the Notice of Sale, you still have the benefit of the full 35-day statutory notice period under the Mortgages Act that the mortgagee is required to provide before exercising any enforcement methods, including proceeding by way of power of sale and potentially selling the property from under you or prejudicing your rights to redeem the mortgage.

Depending on the circumstances of the fraud, your lawyer may seek an injunction in court seeking to restrain the mortgagee from selling the property under power of sale, if advisable, or take other such steps as are necessary under the Land Titles Act to preserve your rights and the status quo, pending determination as to the validity of the mortgage.

If a review of the file indicates that the mortgage documents were forged, you may have recourse outside of court by seeking a hearing before the director of titles to discharge the fraudulent mortgage, pursuant to the Land Titles Act. Under this scenario, the director of titles may freeze the PIN pending the hearing, precluding any dealings with the property until the hearing.

If the mortgage fraud did not involve forgery and you may have been duped into signing mortgage documents unwittingly, you may still have recourse in court to seek a discharge of the mortgage or modification of its terms.

If you succeed with your court case, you will ask the court for an Order removing the mortgage from title which you can then file with the Land Registry Office. This will effectively remove the encumbrance from title to your property.

If you are the victim of mortgage fraud involving a mortgage lender and a third- party fraudster, chasing after the fraudster should be secondary to taking immediate steps to try and preserve your rights and prevent your condo from being sold. Ultimately you may succeed in obtaining a civil judgment against the fraudster, but this will take time and cost money. Typically, fraudsters do not keep money in the jurisdiction, and your money as well as their assets likely will be long gone by the time you obtain judgment against them.

So, you may end up with what is known in the litigation business as a “hollow judgment,” in other words, judgement in your favour with no money or assets available to recover.

Therefore, as a practical matter, a civil judgment against the third-party fraudster may not be all that useful unless you have evidence that the mortgagee was also involved or complicit in the fraud.

If you purchased title insurance when you purchased or re-financed your condo, you or your lawyer should file a title insurance application as soon as possible to preserve possible coverage. Title insurers may cover losses sustained by homeowners who are victims of fraud when there is evidence of forgery or falsification of documents.

Lastly, you can report the mortgage fraud to the police as well as the Canadian AntiFraud Centre.

Unfortunately, this is mostly a matter of public record and recognition. Unless the fraud is widespread (affecting hundreds of homeowners), the police may not investigate. They have limited resources and may view any isolated incident as a civil matter that does not warrant their involvement.

Even if the police do investigate the fraud and charge or convict the fraudster, this may not assist you in retrieving your money or discharging the mortgage unless the fraudster is willing to make restitution for your damages to be factored into sentencing.

If you have fallen victim to a mortgage fraud, you should consult with an experienced commercial litigator immediately to help you navigate through the very difficult process of trying to discharge the mortgage and regain the equity in your home. 1

Ellad Gersh is a partner at Robins Appleby LLP, with an emphasis on litigating real property disputes, including construction litigation, mortgage fraud, and condominium disputes.

The first part of this article series can be found in CondoBusiness' spring issue or on the REMI Network website.