Real estate fraud is real and impacts thousands each year- this, unfortunately, is well known. Organizations from the police to regulatory bodies have made great strides in raising awareness about fraud prevention, and we too have always made this a mandate.
Uncovering and investigating potential real estate fraud on a deal can be like peeling away the layers of an onion. With each layer of due diligence you complete, you learn more which will help you make more informed decisions. We see this stage in 3 processes with 3 distinct actions that can mitigate the chances that a fraud can sneak by you.
Perform top level research. A property details report will tell you the property’s sales history, who owns the home and registered mortgages. This is usually enough to set-off alarm bells. Does something seem up? Proceed to step 2, validating information.
Validate up to the date in question: the homeowners and types and percentages of ownership. Too many transfers and transfers between related parties, even companies, may be problematic. Look at transfer dates and amounts but also what mortgages were registered. Check the property for liens. The best way to do this is through a Parcel Register* which derives data from the Province of Ontario Land Registry Information System – the most current and accurate source of housing data in Ontario. Something come up on your Parcel Register*? Proceed to step 3, checking registered documents.
Check registered documents. Something has come up on title and you want more information, such as who the registering party was. You can do this by obtaining an Instrument Image. An Instrument Image is an image of the document used to register the item and can be obtained by having the registration number of the item registered on the Parcel Register*.
At this point you:
- Should be in a position to determine whether your suspicion is grounded. If fraud is present you should pass on the deal (and therefore take the necessary steps required to alert the appropriate institutions).
- You are armed with more information and your client is able to explain the occurrence and provide you with satisfactory explanation to move forward.
- You know more about the property you are selling because, if you uncovered this information, likely the buyer’s agent will too and it is your responsibility to disclose material facts to a transaction.
The great thing about doing your due diligence is that, when it turns out that your client is clear and there is no fraud present, your client can see that you are serious about what you do and protecting your clients and the public at large.
Get as much information as possible, as soon as possible. GeoWarehouse has the tools that make due diligence and preventing real estate fraud easy.
Find out more by visiting www.geowarehouse.ca.
*An official product of the Ontario government pursuant to provincial land registration statutes.