LET'S TALK Beware of property scams
Buying and selling property is a complex process, made all the more disconcerting by the recent spike in fraud and scams. Conveyancing attorneys and financial institutions are urging clients to be ultra-vigilant by ensuring that they verify all details relating to the transaction before making any payments.
The brazen fraudsters are utilising increasingly sophisticated scams. This is largely due to our reliance on technology and electronic communication. It is therefore becoming increasingly common for fraudsters to intercept or simulate communications between attorneys and their clients in property transactions.
All parties to the transaction must be aware of phishing emails which are designed to elicit sensitive information such as banking details and the like. Fraudsters monitor the progress of a transaction and then send a mail from a dummy account (which looks very similar to the authentic email address), notifying the purchaser of a change in banking details of the conveyancing attorney or other party involved in the transaction.
Any mails notifying of a change of banking details should be viewed with suspicion and treated with caution. If there is a suggested change in banking details, it is advisable to phone the relevant party and verify the change in banking details. Do not merely contact the number that is reflected on the email; instead phone the telephone number that you have made use of in the past. It is advisable to meet in person, if possible, with the party suggesting a change in banking details and to confirm that change with them directly. It is also important to not simply click ‘reply’ to an email when you are sending important information. Instead, create a new email and search for the email contact in your Outlook address book which you utilised for communication purposes historically. In this way, you avoid replying to a fake email address that looks similar.
Property scams have potentially serious ramifications. For example, if the purchaser pays the funds into a fraudulent account, he or she may no longer be in a position to comply with his/her financial obligations in terms of the agreement of sale. This could result in the Purchaser being held in breach of the sale agreement with possible exposure to the seller and estate agent for damages which they may suffer as a result.
When purchasing a property, you should not, under any circumstances, pay any funds directly to the seller. It is preferable and in fact common practice for all funds (including deposits, transfer costs and the like) to be paid into the trust account of a conveyancer in order for the conveyancer to administer those funds in accordance with the provisions of the sale agreement.
With that in mind the agreement of sale should clearly state that all funds will be paid directly to the conveyancer, including the deposit and transfer costs. If the estate agent or seller requests funds to be paid directly to themselves; you need to immediately notify the conveyancer before making payment.
An example of a scam used by fraudsters in property related transactions occurs in instances where Fraudsters advertise properties (which may not in fact be on the market) at a price that is well below market value in order to create greater interest in the property. The prospective purchaser, having been lured into making an offer, signs an agreement of sale which requires that the deposit is paid directly to the “estate agent”. Needless to say, once payment is made, ostensibly in terms of the sale agreement, that’s the last the Purchaser sees of his/her deposit. It is therefore important for a purchaser to be well informed about market related prices within the area they are looking to buy. If a property is advertised way below the market related price for that area it should raise concerns. If it sounds too good to be true, it often is. It is advisable to “Google” the estate agencies contact details to query the legitimacy of the property listing. Do not merely contact the number at the bottom of the advertisement.
An estate agent must be registered with the Estate Agency Affairs Board (“EAAB”) and have a valid Fidelity Fund Certificate (“FFC”). It’s illegal for an estate agent to practise if they are not in possession of a valid FFC. These certificates are issued on an annual basis and must reflect that the agent is licensed to practise for the current year.
If you have any doubt about an estate agent or conveyancer’s legitimacy, contact the EAAB or the Law Society of the province in which the conveyancer conducts practice.