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Alberta Dower Act Case: Fraudulent Mortgages

A recent case from the Alberta Court of Appeal considered the Dower Act and a fraudulently obtained mortgage. The Dower Act is designed to protect spouses from one spouse transfering or mortgaging their interest without the other's consent.

The case of Inland Financial Inc. v. Guapo (2020-ABCA381) involved a mother who spoke little to no English being deceived by her fraudster son into obtaining a mortgage from the Plaintiff mortgage company. The money was advanced to the son, who signed a fraudulent dower consent in his father's name. The mother had no idea what she signed. The father knew nothing of what had happened until the foreclosure proceedings started.

There is a quirk of the law. If there is a fraudulent transfer, then that is something protected by Aberta's Torrens land registration system, and the spouse who has been defrauded can make a claim on the assurance fund. However, for a fraudulent mortgage, the situation is different.

The Alberta Court of Appeal applied the Supreme Court of Canada's decision of British American Oil Co v Kos, 1963 CanLII 107 (SCC) saying at paragraph 23:

British American Oil makes it clear that the 1948 amendments to the Dower Act did not bring invalid mortgages made without the consent of the spouse within the protective scheme of the Land Titles Act. A fraudulent mortgage made without the consent of the spouse registered at the Land Titles Office does not convert the right of the married person with a dower interest into an action for damages recoverable from the General Revenue Fund or Assurance Fund, as is the situation with a fraudulent transfer. Rather, the fraudulent mortgage is invalid for lack of consent and is to be removed from title to preserve the dower rights of the married person.

If you have been affected by a similar situation, please feel free to contact us.

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.

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