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Combatting Real Estate Fraud: Insights from Industry Experts

Through our regular Market Insight Forums, Teranet is committed to connecting our customers and partners with industry experts to bring different perspectives and points of view together to foster dialogue and collaboration amongst industry professionals.

As March is Fraud Prevention Month in Canada we hosted two forums, the first of which was focused on how real estate, legal and lending professionals must remain vigilant against the rising tide of fraudulent activities that threaten our industry. During this forum a panel of experts shared key insights regarding prevalent fraud schemes, the need for a coordinated effort to combat fraud and strategies to mitigate risks effectively.

Teranet’s Senior Vice President of Registry and Property Solutions, Dil Grewal, led the discussion between Rebecca Hockridge, Director of Titles, Land Registration Services Branch, MPBSD, Ray Leclair, Vice President Public Affairs, LAWPRO, Asif Khan, Broker of Record, RE/MAX Prime Properties and Ariel Reyes, Detective Constable, Peel Regional Police.

Rebecca, Ray, Asif and Ariel discussed the need to focus on due diligence, the need for collaborative efforts amongst all parties involved in real estate transactions to thwart fraud and the important role education and awareness plays in identifying potential risks. If you’d like to watch the full discussion we have a link to a recording of the Market Insight Forum below, but here are a few key insights from our panelists:

  1. Rebecca shared that assessing the prevalence of title fraud is challenging due to discovery and reporting delays, but reports have increased in recent years. Most fraud occurs in refinance transactions, with some fraudulent sale schemes targeting tenanted or vacant investment properties. A troubling trend targets the elderly, with fraudsters pressuring them into unnecessary or overpriced home renovation contracts, financed through mortgages. Power of attorney fraud is also emerging as a trend, which involves forgery or alteration of documents.
  2. Fraud is on the rise as perpetrators become more creative which makes proper due diligence crucial. By conducting thorough due diligence and maintaining open communication channels, discrepancies can be uncovered before they escalate. Asif reminded attendees to trust their instincts and that “if it seems too good to be true or seems that it’s a fraudulent transaction, it probably is.”
  3. Real estate, lending and legal professionals shouldn’t rely solely on verifying the ID that’s provided to them upfront and stay alert to signs of fraud. Rebecca recommended going off script, which means “ask questions in conversation about the property, about the transaction, and just take a piece of information that you’ve already been given and ask a further question about it. At the beginning of my career, I remember being told, if you have any doubts about the client, ask them for their library card. And I’m not suggesting that you all go out and ask your clients for library cards. But the point is a good one, which is don’t just fall into a routine and ask what is expected. Ask something that they aren’t prepared for and see what answer you get.”
  4. Constable Detective Ariel Reyes pointed out that a repeated theme throughout the forum was confirmation and shared that fake IDs are used not only for opening bank accounts but also for establishing multiple businesses. Collaboration and information sharing with regulatory agencies are crucial to identifying and stopping fraudulent activities. If you believe you have a fraudulent case to report, gathering detailed information, such as driver’s license numbers and social media handles, aids in investigations. Even small details like email addresses can be valuable to law enforcement. Reporting suspicious activities to authorities preemptively is encouraged, as it facilitates prevention rather than post-fraud investigations.

Ray ended the session by stating that it is widely believed that because the number of fraudulent cases is very small compared to the millions of transactions that are completed each year it’s not something to worry about. He went on to say that “I compare fraud to the lottery. There’s a very little chance that I’m going to win the lottery on Friday night when they pull the draw. But if they do, it’ll have a great impact on my life. And fraud is the same thing.” While the cases of real estate fraud are low the impact of fraud is huge, which is why all parties involved in real estate transactions need to remain vigilant as we work to mitigate this increasing risk together.

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