Mortgage Fraud

Section 385 of the Criminal Code makes it an offence to induce a purchaser, mortgagee or creditor to accept a mortgage while concealing any encumbranceA burden or impediment on the title. Importantly, no prosecution under s.385 can begin without the Attorney General's consentVoluntary agreement to engage in an sexual act. Mortgage fraud more broadly occurs when anyone — including a mortgage broker, real estate agent or lawyer — misrepresents information to obtain a mortgage that would not otherwise have been approved.

Fraudulent Concealment of Title Documents

Section 385 of the Code makes it illegal for a vendor, mortgagor, or their representative to conceal from a buyer or lender any settlement, deed, will, or other instrument or act material to the title, or any encumbrance on the title, with intent to defraud. Falsifying the chain of title (the "pedigree" of ownership) is also covered. Note that proceedings under this section require the consent of the Attorney General.

Fraudulent Registration of Title

Section 386 of the Code makes it illegal for anyone acting as a principal, agent, or mandatary in a property registration proceeding to knowingly and with intent to deceive make a material false statement or representation, or to suppress or conceal from a registrar or judge any material document, fact, or information.

Fraudulent Sale of Real Property

Section 387 of the Code makes it illegal to knowingly sell real property while aware of a prior unregistered sale, or of an existing unregistered grant, mortgage, lien, hypothec, or encumbrance affecting that property.

Misleading Receipt

Section 388 of the Code makes it illegal to knowingly, and with intent to mislead, injure, or defraud someone, issue a written receipt or acknowledgment for property before that property has actually been delivered or received. It is also illegal to knowingly accept, transmit, or use such a premature receipt. The identity of the intended victim need not be known to the person issuing the receipt.

Fraudulent Disposal of Goods on Which Money Advanced

Section 389 of the Code targets a vendor or consignor who ships goods to a warehouse, factor, agent, or carrier where the person receiving the goods (the consignee) has advanced money or given valuable security against those goods. It is an offence for the vendor to then dispose of the goods in a way that is inconsistent with any agreement made with the consignee, with intent to deceive, defraud, or injure the consignee. It is also an offence to knowingly assist someone to do this. A defence exists if the vendor pays or tenders the full amount advanced by the consignee before making the inconsistent disposition.

Fraudulent Receipts Under Bank Act

Section 390 of the Code makes it illegal to knowingly make a false statement in any receipt, certificate, or acknowledgment that may be used for a purpose mentioned in the Bank Act. It is also illegal to knowingly alienate or part with property after giving another person such a receipt, certificate, or acknowledgment for it, without the consent in writing of the holder or without producing and delivering the original document.

Disposal of Property to Defraud Creditors

Section 392 of the Code makes it illegal to dispose of your own property with intent to defraud your creditors. This includes making gifts, conveyances, assignments, sales, transfers, or deliveries of property, or removing, concealing, or otherwise disposing of it. Receiving property from someone who has disposed of it in this way, intending that it be used to defraud their creditors, is also an offence.

False Pretence or False Statement

Section 362 of the Code makes it illegal to obtain property, money, or credit by a false pretence or by fraud. One example relevant to mortgage fraud is making a false written statement about your financial means with intent that it be relied upon to secure a loan or credit advance. Where the value involved exceeds $5,000, or where credit is obtained by false pretence or fraud, the offence on indictment carries a maximum of 10 years imprisonment. On summary convictionUsed for lesser offences the default maximum is a $5,000 fine and/or two years less a day imprisonment.

Forgery

Section 366 of the Code makes it illegal to make a false document while knowing it is false and intending that it be used as genuine to the prejudice of another person. In the context of mortgage fraud, forging title documents, mortgage applications, identification, or appraisals can engage this provision. The punishment provision is in section 367, which provides for a maximum of 10 years imprisonment on indictment.

Use, Trafficking or Possession of a Forged Document

Section 368 of the Code makes it illegal to use or deal with a forged document as if it were genuine, to cause someone else to use it as genuine, to transfer or sell a forged document knowing that an offence will result, or to possess a forged document with intent to use it fraudulently. The maximum penalty on indictment is 10 years imprisonment. This provision often accompanies forgery charges in mortgage fraud cases where fabricated documents are submitted to lenders or registries.

For the Crown to find you guilty of mortgage or related frauds, they must demonstrate beyond a reasonable doubtThe standard that must be exceeded to find someone guilty that "by deceit, falsehood or other fraudulent means" you defrauded another person or a company. In many cases, the Crown’s evidence will be financial records and documents, which your defence lawyer can analyze for inconsistencies. The Crown must also show that a financial loss occurred and that you purposefully committed some action to cause that to happen.

Canadian courts deal with offences in three ways. A summary offenceLess-serious criminal offences is for less serious crimes such as thefts under $5,000, while an indictable offenceA more serious type of Canadian criminal offence. includes murder, sexual assault and aggravated assault. In between those two is a hybrid offenceAn offence the Crown can proceed with summarily or by indictment. which includes mortgage fraud, where the Crown can deal with it as either a summary or indictable offence.

If a mortgage or related charge is treated as an indictable offence, the maximum penalty is two years behind bars. If it is treated as a summary conviction, a lesser penalty will be handed down. The one exception to this is with the charge of fraudulently registering a title, It carries a maximum penalty of a five-year prison term if it is treated as an indictable offence.

Mortgage fraud can also have regulatory, licensing, or civil consequences. This page focuses on criminal offences.