Tag: check fraud

I have now done an interview about the material set out in my post Crooked Real Estate Vendor — A Few Ideas For Real Estate Agents. You can see it here:

I recently spoke to Allan Fok and his colleagues at Century 21 Times Square Realty Inc. Brokerage in Richmond Hill, Ontario, on the topic of Crooked Real Estate Vendor — A Few Ideas For Real Estate Agents.  My fellow lawyer Jeff Jiehui Li also spoke, on tax law issues. After the presentations the group went to the Premiere Ballroom & Convention Centre, where we lunched amid the statues and giant paintings.

Here is an outline of the points I covered:

Beware the crooked real estate vendor. Whether you are acting for the vendor or the purchaser, the crooked vendor is a danger.

1. The Crooked Real Estate Vendor can make tremendous trouble. You yourself can be a target of fraud. Also, you can be sued for someone else’s fraud. For example:

a)      You can be sued for passing on a misrepresentation to the other side – make sure to be clear in writing that you are passing on what the client says, it is not something you are saying;

b)      You can be sued by your own client for negligence or breach of contract;

c)      If you pay out based on a bad cheque, you or your firm could be out of pocket.

2. Real Estate Frauds Are Often Based On:

a)      Vendor is not as represented, e.g. identity theft;

b)      Vendor AND purchaser are not as represented, e.g. inflating the value, cheque fraud;

c)      Property is not as represented.

3. Trust But Verify

4.   Vendor. Who are you really dealing with?

a)      Get photo ID, preferably 2 pieces of government-issued ID, and copy it yourself or have your own staff copy it;

b)      Use http://www.canada411.ca for a reverse lookup on any phone number given to you;

c)      Search your and your firm’s records for references to the person;

d)     Make it plain in writing to both vendor and purchaser which side you act for, and that you do not act for the other side;

e)      If any part of the purchase price flows through you, do not be rushed into sending the funds to the vendor before absolutely sure that the cheque is good. Clever fraudsters can make very plausible cheques that can even fool a bank for a while.

5. Purchaser

a)      If you act for the purchaser follow the same steps as shown above in the “Vendor” area. It would be prudent to check out both the vendor and the purchaser;

b)      To protect a purchaser you can also try one or more of

i.            Clauses in the Agreement;

ii.            Vendor take-back mortgage (better for normal breaches than for fraud);

iii.           Personal guarantee (again, better for normal breaches than for fraud);

iv.           Searches on anything searchable, such as rent review status;

v.            Property inspection; and

vi.           Title insurance (making sure to comply with all insurer requirements).

6. Property Misrepresentation

a)      Legal status of the property, e.g. “legal and unregistered” rents;

b)      Physical condition of the property. Get an inspection, and consider seasonal factors;

c)      Beware of misrepresentation by silence.

7. The Power of the Pen

Documentation is key. “Well I told him that” might sound lame at trial if there is no documentation of it. So:

a)      Keep copies of documents;

b)      Verify discussions and events by e-mail and keep a copy of the e-mail;

c)      As things do not always happen while you are at your computer typing e-mails, take handwritten notes of discussions and other events as they progress, preferably in a hardbound notebook. Do not rip any sheets out of the notebook.

 For more detail you can ask me, or have me speak to your group.