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Posted on March 1st 2009 in Real Estate

Victory for Homeowners Confirmed

In the recent winter edition of Legal Issues we told you about a family whose home had been fraudulently sold and mortgaged. The family successfully sued to have the sale and mortgage set aside. In 2005, Susan Lawrence was a victim of a similar fraud. Unfortunately the judge in her case refused to set aside the mortgage ruling instead in favour of the mortgage company. Ms. Lawrence took her case to the Ontario Court of Appeal.

In a 5-0 ruling, the Ontario Court of Appeal reversed the lower court’s decision and set the fraudulent mortgage aside. The court concluded that registering a fraudulent interest in land could not change the fact that it was a fraudulent interest. The court also recognized that unlike the mortgagee, the innocent homeowner could have no ability to discover that their home was being fraudulently sold and mortgaged.

This decision sends a clear message to banks and other lenders that they must be more diligent before lending money. It should also go a long way to quelling the fears of homeowners.