Real estate identity fraud: The risk is growing – be on high alert

A Surrey lawyer called us last week about one of the most sophisticated real estate identity frauds we have seen. The lawyer acted for a corporate borrower (who was actually a fraudster) seeking to obtain a $950,000 loan from a private lender, secured by a mortgage to be registered against a newly-constructed duplex property in Surrey.

The duplex had clear title, was not yet occupied, and was listed for sale. The corporate borrower was in a rush to obtain financing. There had been no recent changes to the corporation’s directors. A legitimate appraisal of the duplex was obtained and provided to the private lender.

The lawyer met in person with the corporation’s sole director (who was actually an imposter) and obtained copies of a driver’s licence, social insurance card, social services card and permanent resident card. Although the identification appeared to be in order, the lawyer felt something was off.

Acting on her instincts, the lawyer attempted to contact the accountant identified by the corporate borrower. She discovered there was no accountant by that name and, on a drive-by, found that the accounting office did not exist either. The lawyer then contacted the listing real estate agent and arranged for the actual registered owner, who was in contact with the agent, to attend her office. That meeting confirmed the lawyer's suspicions: the individual she had previously met was an impostor, and the mortgage transaction in progress was fraudulent.

We are still investigating this matter, but digital verification with authentication technology was not completed for this transaction.

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 trust your gut instincts. Ask yourself: does this transaction seem too clean and easy? Even if you physically meet with the client, consider completing a secondary digital verification using authentication technology. See the resource Guidance for virtual verification of your client’s identity using government-issued photo ID and technology.

Be particularly wary of rushed transactions on properties that have clear title and are not occupied. These frauds are becoming more sophisticated If something doesn’t seem right, take the time to investigate. Here are some interesting details we have seen in real estate identity frauds:  

  • The property has clear title.
  • The transaction must be completed in a rush.
  • Rental, vacant and unoccupied properties are particularly vulnerable targets.
  • While the fraud can happen with an institutional lender, many involve a private lender.
  • While the fraud can happen in any context, many imposters posing as owners claim to be off-shore property owners.
  • 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.
  • 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).
    • 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, contact LIF’s Director of Risk Management, Maryanne Prohl at 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 at bbuchanan@lsbc.org or 604.697.5816.