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Summary: Wire and trust-account fraud targets the large sums that move during a real estate closing. Fraudsters hack or spoof email to send fake payment instructions and redirect your money, and because wire transfers are irreversible, the funds are rarely recovered. The best defence is to confirm every instruction by phone before you send.
A closing moves a lot of money in a short window, which is exactly what makes it a target. The danger here is not to your ownership of the home but to the funds passing through the deal. Here is how the fraud works and how to keep your money safe.
How does closing-funds fraud work?
Closing-funds fraud usually starts with a compromised email account. A fraudster quietly watches a real transaction, then sends fake payment instructions that look genuine but point to their own bank account, redirecting the money to themselves.
They copy the wording and formatting of a real email and change only the banking details, often with a last-minute message such as "our account has changed" or "we need an extra deposit." The two favourite targets are your incoming funds to the lawyer's trust account and the lawyer's outgoing payments, such as a mortgage payout or the seller's proceeds. This is different from title fraud, which goes after your ownership rather than your money.
Title fraud | Closing-funds fraud | |
What is targeted | Your ownership of the property | The money moving through your deal |
How it works | Someone impersonates you to sell or mortgage your home | A fraudster redirects payment instructions to their account |
Main protection | Title insurance and your lawyer's identity checks | Verifying every payment instruction by phone |
What is a lawyer's trust account, and how does it protect your money?
Your real estate lawyer holds the money for your deal in a trust account regulated by the Law Society of Ontario (LSO). The funds sit there until closing, which gives the transaction one controlled, accountable channel instead of money moving directly between strangers.
Under the LSO's trust rules, lawyers keep client money separate, reconcile the account monthly, and cannot accept $7,500 or more in cash for a matter, a safeguard against money laundering. The trust account only protects you if the instructions around it are verified, though. A fraudster who redirects the deposit going in, or a payout going out, defeats the system, which is why your lawyer confirms payout statements and lender and vendor details directly rather than acting on an email alone.
How do you protect your closing funds?
The single most effective step is to verify every set of payment instructions by phone, using a number you already have, before you send anything. Treat any change to banking details as a reason to stop and confirm.
Confirm the trust-account details by phone. Get the lawyer's trust account information and call the firm on a known number to confirm it before you transfer a cent.
Never trust wire details sent by email alone. Fraudsters copy real emails and swap the account number, so an email is not confirmation on its own.
Treat last-minute changes as a red flag. A sudden "the account has changed" or "send an extra deposit" message is a classic fraud signal; pause and call to verify.
Prefer a certified bank draft. A bank draft delivered to the law firm removes the wire-redirection risk entirely; if you must wire, confirm the account on a live call first.
Keep your transaction details private. Avoid posting your closing date or amounts on social media or sending them over unsecured email, which is how fraudsters find and time their targets.
What happens if funds are sent to a fraudster?
Act immediately. Wire transfers are built to be irreversible, so recovery is unlikely once the money lands, but the first few hours are your only real chance to stop it.
Call your bank right away. Ask them to attempt a recall or freeze on the transfer, and give them every detail you have.
Report it. File a report with the Canadian Anti-Fraud Centre and your local police, and keep every email, receipt, and instruction.
Tell your lawyer. They can alert the other side and the receiving institution and help you document the loss.
Title insurance generally does not cover wire fraud, because it protects your title rather than a redirected payment. With closing-funds fraud, prevention really is the protection.
Frequently asked questions
Is my money safe in a lawyer's trust account?
Yes, when instructions are verified. Trust accounts are regulated by the Law Society of Ontario and keep your funds separate and accounted for. The risk is not the account itself but fraudsters redirecting money going into or out of it, which verification by phone prevents.
How do I know the wire instructions are real?
Confirm them on a phone call, using a number you already have for the law firm, before sending anything. Do not rely on the contact details in the email itself, since a fraudster who sent fake instructions will also give you their own number.
Can I get my money back after a wire fraud?
Usually not. Wire transfers are designed to be irreversible, and once funds reach a fraudulent account they are rarely recovered. Acting within the first hours, by calling your bank, gives you the only realistic chance.
Does title insurance cover wire or trust-account fraud?
Generally no. Title insurance covers title-related risks such as title fraud, not a payment that you or your lawyer were tricked into redirecting. That is why verifying instructions matters so much.
Should I email my banking information for closing?
Avoid it. Unsecured email is a common way fraudsters gather details and insert themselves. Confirm banking and trust-account information by phone or through your law firm's secure channel instead.
About the author
Joel Fox is a co-founder and COO at Ownright. He helps run the firm's day-to-day work on Ontario residential closings, refinances, and sales, and writes regularly to demystify the parts of a transaction that most homeowners only encounter once or twice in their lives.
At Ownright, we focus entirely on Ontario residential real estate law. We hold client funds in a regulated trust account and verify payment instructions directly, so the money side of your closing is handled carefully. You can start your closing online or get in touch with any questions.
Legal references: Trust accounts are governed by the Law Society of Ontario under By-Law 9 (Financial Transactions and Records), which also sets the $7,500 cash-transaction limit.
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
