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As reported recently in the media, there have been several cases in which individuals attempted to fraudulently sell properties in Ontario without the owners’ permission. The cases are believed to be related. In 2021, the Land Title and Survey Authority advised the public of two incidents of similar fraud that occurred in B.C. One of these attempts was identified before the property sold. However, in the other case, title was transferred fraudulently.
We have some details on two of the Ontario cases. In the first Ontario case, two individuals stole the identities of owners who were out of the country for an extended period, listed the property with a real estate licensee, and sold the property to unsuspecting buyers.
In the second Ontario case, two Individuals rented a property using false identification, stole the identity of the property owner, and attempted to sell the home.
In the first case in Ontario, the individuals used fake identification so well crafted, the lawyers and licensees involved were unable to spot the forgery.
In the second Ontario case, a rental property manager would typically have been involved with collecting, and verifying where applicable, identification, employer information, personal reference information, and credit history when the individuals applied for tenancy. It was later discovered that the applicants’ identification and employment letters appeared to be fake.
Knowing your clients is an important first step in any agency relationship and is imperative in identifying and preventing fraud and money laundering.
You are required under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”) to collect specific client information and verify government issued identification, to confirm the identity of clients you are working with. That information is kept in the brokerage file as required under the PCMLTFA compliance regime. See BCFSA’s Anti-Money Laundering Guidelines.
There are additional steps you can take to help thwart potential fraudsters and protect the industry and the public.
For trading services licensees:
- Go beyond collecting the information required under PCMLTFA, which is a minimum standard.
- Talk to your client and get to know them.
- Ask clients conversational questions about themselves such as where they work, how long they have lived in their current place of residence, where they have lived previously, and their marital status.
- Take notes to record the information. If the information provided changes over time, it may raise a red flag and prompt additional clarification or confirmation.
- Verify information about a seller on the property title. Look for discrepancies in how your client’s name is spelled, or what charges are registered against the property. See BCFSA’s Land Title and Survey Authority (LTSA) Information.
- Use registries such as the Land Owner Transparency Registry which can help support or refute what a buyer has said about being a first-time home buyer or an owner of several properties.
- Compare the information on documents provided by your clients and that you gather to ensure they are consistent with each other and the information your client provides.
- If you are dealing with an agent or attorney who is not a real estate licensee, try to speak directly with the owner.
- Look for other red flags that might call for greater scrutiny like refusals to publicly list or advertise the property, a desire for a quick deal, an empty or abandoned property, unusual email address formats, or a willingness to accept much less than market value.
- Raise any concerns you have with your managing broker.
For rental property managers:
- Information provided in a tenancy application should always be verified for your landlord client. This includes calling references and confirming that the prospective tenant works where they say they do.
- Simple social media searches may also yield information that can support or refute information provided by a prospective tenant.
- If the information provided by the prospective tenant does not match the information you have gathered, determine if there is any way to verify what is true.
Raise any concerns you have with your managing broker.
Licensees are expected to exercise due diligence to ensure the people you are working with are who they claim to be and have the authority to sell.
Being able to demonstrate you exercised due diligence to verify the information provided by your clients can go a long way to protecting your reputation in the industry, the interests of your clients, and the reputation of your brokerage.
And remember that land title regimes vary between provinces and the use of title insurance may be something to consider. This is a complex area – do everything you can to ensure you protect your clients from these types of fraud and do not become involved unwittingly.