| Real Estate Essentials

We all like to believe it could never happen to us. We have far too much common sense to be fooled and defrauded on such a major purchase, but real estate scams do exist, and they happen precisely because some of us operate in far too confident a manner. The best defense is education, so here are some important real estate scams you need to be aware of.

 

1. Title Fraud

In this real estate scam, the scammer forges false documents and poses as the property owner of the property they wish to have. They then register other forged documents to transfer the property into their name. They get a mortgage on the property and use all the cash for their own purposes, leaving the actual owner of the property on the hook for future payments.

 

While this real estate scam is relatively rare, those who have fully paid off their homes are the ones who should be most vigilant about title fraud as they are prime targets. The best protection against this type of fraud is title insurance. Not only does title insurance guard against title fraud, it also protects a new owner from any existing liens against a property’s title, errors in surveys and public records and encroachment issues.

 

2. Foreclosure and Home Equity Fraud

Foreclosure fraud and home equity fraud can be a devastating type of real estate scam. In this instance, a homeowner is struggling to make mortgage payments and is looking for another loan to cover expenses and consolidate their loans. A scammer will provide a loan for the homeowner but instead of paying the bills and taxes, will take off with all the payments, leaving the homeowner without their home and in worse debt than when they first started.

 

For those of you who are crunched for cash and are looking to consolidate your loans, consider going to a legitimate bank, broker or private lender first. These people should be forthright with you and explain all the risks involved in getting a home equity loan. If someone you are speaking to is inviting you to embellish your application in any way, dismiss that lender immediately.

 

3. Property Investment Seminars and Courses Fraud

It is a commendable quality to invest in your own success. But if you are looking to learn more about property investment you will need to do a lot of research before settling on a specific instructor or course. The value of information provided in these classes vary wildly – as can the costs. One way these scams crop up are through the education of very high-risk investment strategies that include borrowing huge sums of money to buy into an investment offered by the course host. Another is that they can take you to a real estate development where you will be pressured to make a commitment to invest without obtaining legal advice first. Sometimes, they threaten that you will have to pay for your own travel and accommodation to these real estate development sites if you do not invest.

 

Of all the real estate scams mentioned in this article, property investment seminars and courses fraud is by far the most common in Canada. If something sounds too good to be true, it probably is. Make sure you do serious due diligence before you sign up to any course, do not be afraid to seek the advice of a trusted real estate agent or bank advisor to see if a course or seminar is up to snuff.

These are only a handful of real estate scams that exist in Canada. Instead of being afraid at every corner, it is really important to only work with people you know and trust. I have over three decades of experience in the real estate market in Toronto and am happy to answer as many of your queries and concerns as I can regarding real estate scams if you contact me.