Attention real estate lawyers: Identity frauds continue

A Vancouver lawyer called LIF last week about a real estate identity fraud. The lawyer had acted for a private lender after receiving a referral from a trusted mortgage broker with whom he had worked on many previous transactions. The borrowers, represented by a notary, sought to register a second mortgage of $750,000 against a Vancouver property. The notary declined to act for the borrowers after determining their driver’s licence was fraudulent. Although the licence indicated a date of birth of 1946, the notary discerned that the borrowers appeared to be much younger. Further investigation revealed that the mortgage broker had received this referral through a fraudulent mortgage broker.

There are many variations of real estate value and identity fraud. Even the most diligent real estate conveyancer can be duped. What can you do? Carefully verify your client’s identity for real estate and loan transactions. Be on the lookout for anything suspicious and keep your guard up—ask yourself, does this transaction pass the “smell test”? Be particularly wary of funds being paid to you as a deposit by third parties who are not related to the transaction.

Here are some interesting details we have seen in real estate identity frauds:

  • While the fraud can happen in any context, almost all imposters posing as owners claim to be off-shore property owners.
  • Rental and vacant properties are particularly vulnerable targets.
  • Many similar or related transactions involve the same property.
  • The client does not require title insurance despite a significant loan, or title insurance has been declined.
  • The transaction must be completed in a rush.
  • Something is off with the ID, for example:
    • Photographs in the passport and driver’s licence are of two different people.
    • Signatures are different.
    • Passport and driver’s licence expire on the same date.
    • Photographs in the IDs are the same although they were supposedly taken 10 years apart.
    • Picture ID does not match the borrower.
    • The person is smiling in their ID (not allowed in government ID).
    • And now: the age shown on the ID does not match the borrower.

If a mortgage broker is involved and you have doubts about the authenticity of the broker, check the BC Financial Services Authority’s records to see if they are currently registered under the Mortgage Brokers Act as required by law.

For more resources, including tips to help keep you safe, see:

If you are dealing with a scam or have questions, call Director of Risk Management, Maryanne Prohl (mprohl@lif.ca or 604.605.5349).

If you have questions about verifying your client’s identity, the source of money for a transaction or scams generally, contact Practice Advisor, Barbara Buchanan, KC (bbuchanan@lsbc.org or 604.697.5816).