Real Estate Fraud

How can you protect yourself from real estate fraud? Can someone sell your house without you knowing that it’s even happened?

Real Estate Fraud in the Suburbs

Recently a house in the Canberra suburb of Macgregor was offloaded through a South African-based real estate scam without the owner’s knowledge. The owners, who are based overseas, only discovered their investment property had been sold when they contacted their property manager to query why rental money hadn’t been paid. Canberra Police are now investigating a series of exchanges which resulted in the real estate fraud and the disbursement of funds.

The real estate fraud spanned several months over 2013 and 2014 and began when the scammer impersonated the woman, contacting her property manager on a fake email address and asking to change their contact details with “immediate effect” claiming her old email, which they provided, had been compromised. They also provided a contact number. It is unclear how they knew who the woman’s property manager was or her old email address.

real estate fraud, conveyancing, property lawThe fraudster instructed the agent to sell the home, even telling them to sell it for $400,000 without contacting her first or to get in touch if any offers below that were made. The scammer also provided a signed authority for the agent to act on her behalf for insurance claims or enquiries about the property.

The agent told the fraudster the suggested $400,000 asking price would be undervaluing the property and they should aim for a higher figure. But the fraudster persisted, instructing the agent to “use their discretion to achieve the best price without delay”.

Contracts were then exchanged with the brazen criminal forging the victim’s signature on the contract. They also asked for the money from the sale to be deposited into an Indonesian bank account and even called the real estate agent. The scammer’s lawyers were able to get the victim’s certificate of title and discharge of mortgage from safe custody at her bank.

The sale settled in February 2014 and the fraudster again forged the victim’s signature on the transfer. Now the money was gone.

Several months passed and it was only in July 2014 that the real owner learnt that the home she purchased in 1991 had been sold. She had paid off her home loan in 2005.

[Tweet “Real estate fraud begins with identity fraud.”]

“The absence of the home owner and an inability to personally review documentation which may be fraudulent provides leverage for the scammers to operate. Police would urge home owners residing overseas or travelling overseas for a lengthy period to establish robust protocols which protect and confirm their bona fides,” ACT Police said in a statement.

Meanwhile, scammers are also targeting Perth properties, trying to sell them without the knowledge of their owners.

The scams both began about December last year when the scammers successfully changed the contact details of the real owners of the properties which had been tenanted and rented out by real estate agents.

In 2010 Perth man Roger Mildenhall had his duplex in Karrinyup sold while he was living in Cape Town. It was sold without his knowledge for $485,000 by Nigerian-based scammers purporting to be him. The scammers then tried selling his home in Wembley Downs, which was full of his furniture and two cars, but were foiled when a neighbour alerted Mr Mildenhall to the sale.

A Ballajura property owner was stunned in August 2011 when they returned to WA from overseas to discover their house had been sold without their knowledge.

The anonymous owner’s identity had been stolen and an investigation by WA Police and the Australian Federal Police traced the scammers to Nigeria. The $400,000 proceeds of the sale were transferred to a bank account in China and have not been recovered.

In one case, the agent became suspicious after receiving a phone call from the scammer, who had an African accent, wanting an urgent sale for the property that had just sold two months earlier.

[Tweet “It’s important that all parties to a real estate transaction provide identification.”]

In the second case, the agency had received a request to sell the property supported by copies of fake passports, forged signatures and a letter of verification purportedly from the Australian High Commission in Pretoria, South Africa.

real estate fraud, conveyancing, property lawEarlier this year NSW Fair Trading Minister Stuart Ayres issued a warning to property owners and real estate agents about scam emails being sent to landlords living overseas.

“The scam email advises agencies of managing landlords to forward forms to them to complete and return to the scammer,” he said.

“The forms require detailed personal information as well as photocopies of passports and mortgage account numbers.”

 

 

In the Western Australian cases, the real estate agents had sent the fraudsters documents relating to the properties before it was realised that there may have been identity issues. If the agents involved in these incidents are found to have not taken due care in their transactions, they could be referred to the State Administrative Tribunal where they could be penalised.

Real Estate Fraud Usually Begins With Identity Fraud

Peter Cutajar, national manager for insurer First Title, said: “It may be that the Canberra one will be one of a few, and we might not know about it yet because what they’ve been doing is targeting owners that live overseas.”

Cutajar said there was a real risk in Australia’s property market of scammers stealing their title and selling or mortgaging their property without their knowledge.

“If an organised crime group is going to do some, they do some, they don’t just do one,” he said, adding “most of the property, if not all of them were unencumbered properties.”

He said real estate fraud all starts with identity fraud. The scammer acquires fake birth certificates, Medicare cards, passports and drivers licences in the home owner’s name. Cutajar said the forms of identification only need to look real because a real estate agent or solicitor are only going to sight the documents.

real estate fraud, conveyancing, property lawBut the complexity of the real estate fraud and the number of parties which in most cases are innocently involved – the real estate agent, solicitor, buyer and owner – makes it hard to retrieve the money.

“The money is transferred out of the country within 12, 24 or 36 hours,” Cutajar said. “Once it hits an offshore account it gets transferred from one account to another. Often the settlements are on Friday…if it happens on Friday you’re two or three days ahead before anyone finds out because of time zones and because of the weekend.”

Two ways to defend against it, Cutajar said, are taking out title insurance, and never acting for yourself, but instead instructing a solicitor or conveyancer, and involving a real estate agent.

The New South Wales Office of Fair Trading last year released guidelines for real estate agents outlining ways to spot fraudsters.

[Tweet “There are a number of ways you can spot a real estate scam, including changing contact details.”]

Warning signs include recent contact detail changes, international documents from countries “known for scams”, a request for funds to be transferred overseas and offering incentives for a quick sale.

If you’re ever wondering why a real estate agent and lawyer of good repute ask for your identification details, this is one of the reasons why – to protect you against real estate fraud. For your free, 10-minute phone consultation, please contact us today.