Ontario regulator warns real estate agents to watch for signs of fraudulent home sales

Supported By:

Net Patrol International Inc.  Data Investigation and Forensic Services
Bankruptcy and Insolvency Trustees

The body that regulates Ontario’s 100,000 real estate agents and brokers is urging them to be more vigilant when verifying the identity of a client, amid a wave of fraudulent home sales and mortgages in the Toronto area.

The Real Estate Council of Ontario (RECO) memo, sent Tuesday afternoon, reminds members they’re required by law to verify the parties in a transaction are who they say.

“You play a crucial role in protecting the interests of your clients and the integrity of real estate transactions,” the memo reads.

“Your duties … also include continuously being vigilant for anything that seems suspicious or inconsistent.”

The memo comes just weeks after CBC News published a series of reports that found dozens of homes in the Toronto area have had either mortgages placed on them without owners’ consent or sold without their knowledge. CBC News is aware of at least six properties that were fraudulently sold.

In those cases, the owners were often out of the country and had rented their homes before individuals posing as the owners put them up for sale. Police are investigating.

RECO registrar Joseph Richer said in a statement the alert was issued because the alleged frauds are “causing tremendous hardship to victims.”

While RECO’s move is being welcomed by some, others question why the memo is only being released now, and how agents who don’t follow the rules are being held to account.

One of the memo’s recommendations is for agents to confirm an individual looks like the photo on their identification and that “the age seems reasonable.”

“I think that is directly related to our case,” said Melissa Walsh. 

Her 93-year-old great-uncle nearly had his home sold from under him a year ago — when alleged fraudsters posed as renters to get access to his home in Toronto’s Beach neighbourhood, and others posed as him to list it for sale.

Multiple offers were placed on the home, but Walsh and her family realized it was being sold and managed to stop it.

“It’s good to see that there’s more information out there and that people are being advised to be vigilant. But again — it just seems like it’s a little too late,” said Walsh.

She questions why the practices listed in the memo may not have been followed by Realtors in the past, and why more aren’t being held accountable for not properly verifying IDs.

Other steps

RECO is also urging its members to verify the height and eye colour on a driver’s license, to make sure they match the person renting or selling a home, and using online tools such as Ontario’s Driver’s License Check system to see the status of that licence.  

The memo also urges realtors to monitor details on paperwork closely.

“Be vigilant for any inconsistencies, such as spelling errors when the buyer or seller writes their name or email address, or other odd or unusual mistakes,” the memo reads.

In two of the cases CBC News reported on — one where a home was sold, one where a sale was averted at the 11th hour — there were spelling mistakes on the sales paperwork, and fake ID was allegedly used by tenants who rented the homes and by the people posing as homeowners.

False credit scores and job references were also allegedly submitted to the Realtors who rented the homes before they were targeted for sale.

RECO also suggests asking the seller questions — such as how old the furnace or roof is — that a true homeowner would actually know, and to have them provide invoices for work done and paperwork for property or income tax. Other suggested questions are when the home was purchased and who the real estate agent was — details that can be checked online. 

It also notes there are legal consequences for those who don’t properly verify an ID, including a maximum fine of $50,000 and suspension or revocation of a Realtor’s registration.

The CEO of the Ontario Real Estate Association says many of the recommended practices are typically followed. 

“It was a very helpful bulletin … a reminder of best practices in this area,” Tim Hudak said of the memo.

“We all need to work together to make sure [title fraud] doesn’t happen — whether that’s the realtors, the bankers, the lawyers, the mortgage title fraud companies and law enforcement. We got to shut this down.”

Provincial legislation

New measures could be on the horizon. Ontario’s Ministry of Public and Business Service Delivery said last month its updated code of ethics for Realtors, under the provincial Real Estate and Business Brokers Act, will come into force on April 1. 

No details have been provided on what specifically that will entail, only that the code will include a specific provision related to fraud. 

The head of one of four title insurance companies in Canada says he’d like to see multi-factor ID verification become the norm in all real estate transactions. That would require a combination of photo ID verification, a credit report search and checks on the phone number provided to make sure it isn’t a burner cell phone.

“Fraudulent identification is too easily obtained and cannot be the only means of verifying ID in a real estate transaction when parties are signing in person,” said John Rider, senior vice president of Chicago Title Insurance Company in Canada. 

“While this statement [from RECO] is potentially helpful in that it will encourage all RECO regulated parties to be more diligent in their review of identification, it will not be sufficient to stop mortgage and title frauds in Ontario,” said Rider.

This article was originally sourced from www.msn.com