Real estate identity frauds continue – be on high alert

Individual homeowner identity fraud

LIF was recently contacted about a highly sophisticated – and successful – real estate identity mortgage fraud, where fraudsters impersonated the legitimate property owners and obtained a $500,000 second mortgage from private lenders, which they registered against a property in Surrey. The lawyer had acted diligently and obtained several forms of identification including BC driver’s licences, Canadian passports, bank cards, and CRA notices of property assessment. The property was occupied and owned by individuals, not by a corporation. Title insurance was required by the private lender and was obtained for the transaction. While we are continuing to investigate this matter, there was nothing unusual or out of the ordinary about the transaction that would have suggested that it was fraudulent. However, innocent property owners ended up with a fraudulently-obtained mortgage registered on the title to their property.

Corporate director identity fraud

A real estate identity fraud was reported to us that involved corporate-owned real estate. In this 3-minute video, Claims Counsel Sherry Kooner describes the fraud and shares key tips on claims avoidance.

The many variations of real estate identity frauds can dupe even the most diligent real estate conveyancer. More examples of imposter fraud activity can be found in Notice: Recent Mortgage Fraud Activity in BC - LTSA. Be particularly wary of rushed transactions on properties that involve private lenders, have clear title, or are not occupied. 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.

These frauds have become 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:

  • While the fraud can happen in any context, many 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).
    • The age shown on the ID does not match the borrower.

If you have doubts about the authenticity of the mortgage broker involved, check the BC Financial Services Authority’s records to see if they are currently registered under the Mortgage Brokers Act, as required by law. And for general fraud prevention, consider advising your property owner clients to register for LTSA’s BC Property Connect service that provides verified owners with certain property alerts for pending changes to their title.

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.