FRAUD

A surprisingly busy start to the year combined with a little writer’s block & here I am at the end of January finally hitting publish on my first blog post of the year!

FRAUD has been all over the news for the past few weeks thanks to 2 high profile cases of fraudulent real estate sales. For some reason this topic has been a tough one to wrap my head around & mostly it’s about what do I want to say about it? What is the point that I want to make? What value can I add to the conversation?

 

• Regurgitate the news articles that have already been written with some added commentary?
• Provide deeper context beyond the sensationalism of the news headlines?
• Lament the fact that fraud seems absolutely rampant in every facet of our lives (the over-dramatic hot take)?
• Ways to protect ourselves?

 

And that’s where I finally landed – how do we protect ourselves? And a bit about how rampant it is, from the little white lies to the really bad stuff…

 

A day in the life of a REALTOR can run the gamut from simple deception to outright fraud, and I’m talking about experiencing it NOT perpetrating it, lol! So we can be a little jaded sometimes…from one end of the spectrum to the other, here are some examples:

 

• Signing up on my website with fake credentials costs me money (Google PayPerClick money) with no hope of recovering it by potentially signing a new client
• Signing my open house sheet with fake credentials creates liability for me & no recourse for my clients if there is theft at their home during the open house. The anger & intimidation we're often faced with when we ask for ID is crazy too!
• Lying about whether you’ve already entered into a representation agreement with another realtor when you want something from me…costs me time, sometimes money & worsens my trust issues (lol)
• Sending me fraudulent documents creates liability for me, costs me credibility with my colleagues if they get past me & wastes my time…and others’ time as well.

 

Not real estate related, but I ran a softball league for adults for many years & from what they would lie about to how they would behave when they didn't get what they want...talk about a study in human nature, lol!

 

But then we get into the next level crap (which I’m thankful that I’ve never gotten caught up in)!

 

• Mortgage Fraud - lots of shady sh#t  in this CBC Marketplace investigation - Watch it HERE 

• Hacking of lawyer and/or mortgage broker email addresses in order to divert funds/information

 

DRAR Members...As many of you know there have been numerous reports of fraudulent activity within the real estate market recently. This is a reminder to please remain very diligent during the transaction.  There have been reports of email addresses from lawyers or mortgage brokers being hacked and changed resulting in individuals unknowingly transferring money or information to an incorrect email address. Small changes in an email address are easy to miss and a sneaky way to commit these fraudulent activities. Please encourage your clients to always contact the original source and to contact you as the salesperson if they have concerns during the process  - Durham Region Association of REALTORS, January 28, 2023 

 

And then we’ve got the “Big Baddy” which is the FRAUDULENT SALES that were all over the news earlier this month!

 

See the stories HERE &  HERE

The (short version) of the likely outcome, according to a lawyer, is as follows:

In this instance, two innocent parties, the original owner and the new buyers both have a claim to title. So...who ends up with the home? Based on the Legal Concept of the Indefeasibility of Title it "should" resolve as follows: 

• The original owners, with the law on their side, go to court and seek a vesting order that will likely be granted and reclaim their property.

• The buyers will be made whole financially through their title insurance which covers these events.

 

So with all that build up, how do we protect ourselves?

 

As Professionals, we need to KNOW OUR CLIENTS! Because if we’re not checking out our clients thoroughly & they commit fraud, then it could be assumed that we were aiding & abetting them. It’s literally our job! Not to mention the fact that otherwise we could be wasting our time, the other agent’s time, the seller’s/buyer’s time, risking our reputations, lawsuits etc!

 

Some best practices would include:

• Pull parcel registers
• Have a lawyer as part of your team to investigate liens & anything else of concern on title
• Ask to see original purchase documents
• Compare photo IDs to available pictures elsewhere, such as on social media
• Compare original purchase date to current age of the sellers; ie, a home purchased in the 1970’s would not be sold by a 30yo without other factors at play than can/should be verified

 

Clients, aka Buyers & Sellers, need to realize & come to terms with how invasive a process it is to ensure that all parties are protected. I don’t particularly want to read your separation or custody agreement (just as an example), but I might need to in order to further your interests or protect the integrity of the transaction or limit liability. And it should go without saying, but be honest! Behind in your property taxes or income taxes? The professionals who are assisting you need to know ALL the facts to best know how to help you!

 

Best practices for you would include:

• Register a lien on title such as a HELOC
• Title Insurance is a MUST
• Safeguard your ID
• Know what your Home Insurance requirements are about leaving your home unattended
• Keep in touch with your neighbours as they can be an early warning signal that something is amiss
• Follow other common Identity Fraud Safety Tips

 

The conveniences of our digital world also come with downsides & mistakes do happen, & that’s why professionals carry Errors & Omissions insurance. But if everyone, including YOU is working together, doing the due diligence that’s needed to safeguard what’s likely your biggest asset, then you’re certainly lessening the chance that YOUR story is the next sensational news headline…

UPDATE: I wrote a follow up post (of sorts) that dives deeper into Title Insurance with key takeaways on ensuring that you have adequate coverage for existing policies as well as the latest scam to be aware of - read it HERE

 

Until next time,