Though the vast majority of real estate agents do the right thing, fraudulent real estate agents do exist. Since buying and selling a home are likely to be some of the biggest transactions you’ll ever make, it pays to research the real estate agent you use thoroughly. Recently, several fraudulent real estate agents have been jailed for behaviour which left their clients out of pocket.
Fraudulent Real Estate Agents – Using Trust Money For Personal Use
Barry Goldman, of Leda Real Estate and Portfolio Property Solutions was jailed for fraudulently converting more than $600,000 held in trust for personal use. The charges brought against Goldman by NSW Fair Trading were in relation to a failure to account for funds and hold money in trust pending the completion of sales transactions.
During the investigations which began in 2014, it was found that $651,183.24 from Leda Real Estate was fraudulently converted for personal use by Goldman. Goldman was also the director of Portfolio Property Solutions when it fraudulently converted $20,152.06, relating to rental money owed to landlords.
Goldman was convicted under the Property Stock and Business Agents Act, which states in Section 211 that “if the licensee fraudulently converts the money [held in trust pending the completion of any transaction], the licensee is guilty of an indictable offence and liable to imprisonment.”
“Mr Goldman had been robbing Peter to pay Paul, with no plan to pay the money back,” NSW Fair Trading commissioner Rod Stowe said.
Fraudulent Real Estate Agents – Misleading Consumers
In Queensland, a northern Gold Coast real estate agent once praised by late former mayor Ron Clarke as “restoring his faith” in the industry, has been permanently disqualified.
Alex Far, the former sales director of Runaway Bay’s Sovereign Realty in Runaway Bay, has been barred from holding a real estate licence following an investigation by the Office of Fair Trading.
Mr Far appeared before the Queensland Civil and Administrative Tribunal on Tuesday after a complaint was lodged with the Office of Fair Trading about the termination of a contract of sale for their property.
The tribunal was told Mr Far presented a contract worth $1.1 million to the property sellers, concealing that the buyer was a deregistered corporation of which he was a former director.
Mr Far also provided the sellers with false information regarding the supposed payment of a $100,000 deposit into the agency’s trust account.
After suspicions were raised, Mr Far produced a series of falsified letters and emails related to the progress of the sale and then wrote a fake letter terminating the contract.
Fair Trading executive director Brian Bauer said the disqualification from the real estate industry sent a strong message to others that misleading consumers would not be tolerated.
“Parties to a real estate transaction have the right to expect that documents they receive have not been tampered with or produced illegally,” he said.“Real estate agents are placed in a position of trust and can be responsible for holding large deposits on behalf of buyers, so the office will take action to remove from the industry people like Mr Far who have displayed dishonesty.”
Fraudulent Real Estate Agents in California
Fraudulent real estate agents aren’t unique to Australia. In California, a real estate agent who went on the lam after scamming a family and four banks out of roughly $750,000 was sentenced to more than six months in jail, according to prosecutors.
The Santa Clara County District Attorney’s Office said between 2006 and 2009 Nancy Kempis, 64, of San Jose, convinced a family facing foreclosure to sell their home to her at a reduced price, then rented it back to them with the promise that she would eventually return it.
Kempis instead used the home to obtain multiple mortgages and then defaulted herself, according to prosecutors. When the home was finally foreclosed, the family was evicted and became homeless.
Prosecutors said Kempis disappeared after being charged with four felony counts of grand theft and one felony count of conspiracy to defraud.
“Ms. Kempis scammed hundreds of thousands of dollars and drove a family into homelessness,” Deputy District Attorney Charles Huang said in a statement Tuesday. “We are pleased that despite her attempt to flee justice, she was held accountable for her crimes.”
How To Protect Yourself From Fraudulent Real Estate Agents
The Australian Competition and Consumer Commission (ACCC) says that it is unlawful for real estate agents to:
intentionally mislead you
lead you to a wrong conclusion or impression
give you a false impression
leave out or hide important information (e.g. in fine-print disclaimers)
make false or inaccurate claims.
It makes no difference whether the agent meant to mislead or deceive you—it is how you perceived the conduct that matters.
You can protect yourself from fraudulent real estate agents by:
Ensuring the agent has a licence. Check with your local state or territory consumer protection agency.
Do some research to understand the going rate for homes for rent or sale in the area. An independent evaluation may help.
Read contracts and documents carefully before you sign. Get legal advice if you are unsure about what the contract means. Ask for explanations to ensure you understand all costs and what they cover; any limitations; lease or settlement time frames and any cooling-off periods.
Ask yourself whether the information the agent has given you seems fair and accurate. Never be afraid to ask for a second opinion.
Be aware of high pressure sales tactics. Any agent who tells you that you must sign today or other similar high pressure sales tactics may be hiding something from you. You should always be given an opportunity to think about and seek professional advice about the purchase.
Never sign blank sales authorities, contracts of sale or rental agreements. The agent may pressure you into signing something because the property is so popular, and threaten you that you’ll lose property. You should seek independent advice about any legal document you sign to protect yourself.
If you’d like more information about a property sale or purchase, or you have concerns about the conduct of a real estate agent, please contact us today. We offer a free, 10-minute phone consultation.