Wednesday, August 29, 2012

Fraud in Real Estate Transactions

Many of you have heard of investors in the David Smith/Olint or the Madoff Investment Scheme  being defrauded of millions of dollars. Some of you would have heard of cases of lawyers defrauding clients of funds in real estate deals. Few of you might have heard of the incidents of fraud which were uncovered at the Titles Office now the National Land Agency (NLA) about ten years ago. The fact is that wherever investment takes place, fraud is a possibility and so vigilance is recommended.

When we speak of fraud we simply mean "profiting by means of deception". It involves depriving the public or an individual of money or property by deceitful act(s). Real estate deals provide fertile ground for the perpetuation of fraud as they involve the exchange of money for interest in property.

More and more organizations are implementing controls to mitigate the risk of fraud in light of the negative effects fraud can have on a company's reputation and its bottom line. Interestingly in many cases the fraud is perpetuated by employees, even those at the top. The National Land Agency was in the news not too long after it was transformed as an executive agency. Over 50 cases of fraud were reported to the Fraud Squad. In some cases landowners were deprived of their property through forgery of signatures or uttering entire fake documents. No doubt the "inside job" participant would have played a role.

I was working at the NLA around that time and got the opportunity to see first hand the efforts that were made by the organization to eliminate fraud. This included document tracking and scanning, training and communication and improved technological solutions to facilitate easier searches. Just this year the public was informed of a property watch initiative whereby landowners will be notified if a transaction is done on a title.

Similarly individuals must be aware of risks of fraud and take initiatives to avoid same. Being hoodwinked out of your money or property is no laughing matter and can have far reaching negative effects. It is important that you not be a willing victim.

Some Tips

  1. Never sign a blank cheque.
  2. Research the parties you will be dealing with. This includes the real estate agent, the buyer or vendor, the attorney and the lender.
  3. Ensure that you comprehend the nature of the transaction. Get your own reputable attorney. It is not recommended that the vendor and purchaser share attorney.
  4. Don't pay funds directly to the vendor. Get a reputable attorney.
  5. Make sure you get a proper receipt when you effect payment. It should include all details - your name, the property, the signing officer and the stamp of the organization.
  6. Find out the costs up-front.
  7. Research the property. Make sure it exists and that the owner is in fact selling.
  8. When you pay a deposit, lodge a caveat on the property to give notice to the world that you have an interest in the property. Some deceptive owners or con artists pretending to be owners sell to more than one person at a time.
  9. Keep your title and all other property documents in a safe, secure place.
  10. Bring a healthy dose of skepticism to investment schemes.
As pointed out above in the first paragraph, there have been cases of unscrupulous attorneys defrauding their clients. This is especially the case where clients or mortgage companies pay funds to the attorney's account and the attorney converts the funds to his or her own use. It is for this reason that the emphasis is placed on securing the services of a reputable attorney. Jamaica is not unique in this regard. As reported recently in Law360, claims against attorneys for malpractice in the US are more often a result of their handling of real estate transactions.  Getting an attorney via a good referral is one method of protecting yourself.


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gregortarquin said...

I invested many cash in real estate property and saw many frauds, people should always be careful in investing money in real estate.

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Kareen Twist said...

Please can you help me I fear my parents have been victim of a fraudulent lawyer in jamaica and I need help finding a reliable honest law firm near the north east of the island that can take this matter up as a matter of urgency and investigate what this firm has done. My parents are english returning jamaican residents. They purchased a property with a deed title through this law firm nearly 10 yrs ago they have all the reciepts and even paid the sellers death duty on the property they still have not been given the deeds by the lawyer taking care of the sale who insits on asking for more money for things like fire hydrants and now there is a threat of a neighbour putting a road through the property maybe even through the home they have built on the land.I am sure to the best of my understanding that under old english law this is not legal. Please I need advice urgently

Mike said...

Encountering fraudulent people while in the process of buying real estate can lead to bad investment choices. I agree with tip #4. It is best to hire the services of an attorney to aid in the payment of funds. Their knowledge and understanding of the legal parameters will be invaluable in helping you land the best deal out there.

Mike Clark

Dee said...

@Kareen Twist. Please contact the General Legal Council and they will advise you how to proceed.

zhaine robenson said...

I enjoyed reading this blog, honestly this post really helpful, I learned a lot how to invest my money properly.

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