One of the most persistent myths in Ontario real estate is that homeowners can protect themselves from title fraud by simply registering a mortgage on title to their property.
The theory is that an existing mortgage will make the property less attractive and more difficult for fraudsters to deal with.
Against my advice, I have had clients insist on registering a mortgage in favour of family members in the mistaken belief that it will be a shield against fraud.
That belief is based on a misunderstanding of how modern title fraud works, and how easy it is for fraudsters to impersonate property owners and steal their equity through forged deeds and mortgage discharges.
A published decision of the Law Society Tribunal last month demonstrates how easy it is for fraudsters to steal the title of an unsuspecting homeowner.
In the discipline case against Paul Steve Druxerman, the Law Society of Ontario obtained an interim licence suspension while it investigates mortgage and title fraud transactions.
None of the allegations against the lawyer has been proven. Instead, the Tribunal sought a licence suspension as there were reasonable grounds to believe there was a risk of harm to the public if Druxerman continued to practise while investigations proceeded. The lawyer consented to the suspension but noted his consent did not equate to an admission of the allegations.
Druxerman told the Star he himself was a victim of the scheme and “did not wish for any more harms to occur.”
One case cited by the Tribunal related to a condominium on Gord Vinson Dr. in Courtice, Ont. It was purchased by Precious Reeves in 2022 subject to two new mortgages. In 2025, Druxerman discharged the second mortgage. It is unclear if funds were paid to the lenders.
Two months later another mortgage was registered on the title by a different lawyer and Druxerman discharged the first mortgage. The owner of the lender company said that he did not sign the mortgage payout statement or receive funds following the discharge.
According to the Tribunal decision, Muhammad Zimran and Zineb Talbani, the owners of a different property on Duignan Cr. in Milton, Ont., were living abroad in September 2025, when Druxerman allegedly transferred the property from them to Fotios Vgenopoulos for $2. The owners deny signing the deed.
Druxerman then represented Vgenopoulos on a new private mortgage for $725,000. The proceeds were wired into Druxerman’s trust account, and the Law Society has been unable to trace the money without access to his financial records.
The real owners never received any of the mortgage funds. The allegedly fraudulent deed and mortgage remain registered on title.
The Law Society notes in its decision that Druxerman did not provided his financial records “to allow it to trace his trust funds, contrary to his obligations.”
Druxerman told the Star he had in fact “filed my financial records, but after the tribunal decision. I am cooperating with the investigation.”
The Tribunal decision describes six transactions in total, and demonstrates the sophisticated manner in which the mortgage schemes were structured.
Today’s fraudsters are not interested in owning a property for its own sake. What they want is to gain access to the equity, convert it into cash, and disappear. The mortgage is not an obstacle to the fraud. It is the fraud.
Several of the transactions under investigation by the Law Society involve mortgages that were discharged and replaced with new financing. The existence of original registered mortgages signed by the true owners does not prevent fraudsters from discharging them and transferring title.
Real estate lawyers are often asked whether a homeowner should register a small mortgage in favour of a spouse, child or family corporation to prevent or discourage fraud.
Homeowners have often been advised — even by their own banks — to register a home equity line of credit with a zero balance to protect against fraud.
My answer has always been that neither strategy provides reliable protection against impersonation and title fraud.
If a criminal can impersonate an owner, create false identification, and forge transfer documents, the existence of a legacy mortgage on title will hardly deter the scheme.
Mortgage fraud is essentially an identity crime, and it is impossible to prevent it.
A mortgage on title is not a security blanket.
But title insurance provides a financial remedy when fraud occurs by paying for the costs of restoring title to the true owners and discharging the fraudulent mortgages.
Bob Aaron is a Toronto real estate lawyer and chair of the Tarion consumer advisory council. He can be reached at bob@aaron.ca . Visit his website at aaron.ca.