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    August 5th, 2008

    Avoiding being trapped…

    ♫ A bit too late, to try to turn back now
    Make things right, now, lights shine on me..♫

    Words and Music by Angels and Airwaves.

    Ron Usher (click on the link to see Ron on YouTube defeating a real estate fraud), a real estate lawyer and one who successfully stopped a real estate fraud with the assistance of the police, has passed along these tips to avoid being caught in a real estate fraud as a lawyer:

    Characteristics of the Fraudulent Transaction:

    1.    The deal is a private sale using BCREA (British Columbia Real Estate Association) forms, but no real estate agent is involved.

    2.    The target property is owned by a single owner with clear title (i.e. no mortgages to discharge)

    3.    The Vendor – Client is not known to you. They state that they found your firm via the Internet.

    4.     A 3rd Party (perhaps the vendor’s  “son”) calls on behalf of the Vendor and makes all arrangements.

    5.     The Vendor insists that the proceeds of sale resulting to the Vendor be paid to a 3rd party (usually a company), accompanied by a story that this on the advice of an accountant.

    6.     The client is vague with regard to the details of the transaction.

    7.     The transaction involves a large deposit which has allegedly been paid directly between the parties, which may not be in line with the terms of the agreement.

    8.      It may be stated that the property is a “Rental property” but there are no adjustments for rent and deposit, as would be typical of such a transaction.

    9.      The address stated for the purchaser may not match the civic address of the actual

    10.    The caller ID displayed on the office phone on phone calls from the Vendor does not match the Vendor’s name.

    11.     If you look up the phone number of the Vendor (using www.canada411.com or the phone book, for example) there is confusion when you call and ask for the client and state that you are acting for them on the sale of their property.

    12.     The ID presented by the purported client (a driver’s licence or Social Insurance Card) is brand new despite the fact that it was “issued” years before.

    So how can you best protect yourself?

    First, look up the Vendor in the phone book or in Canada411 when a deal comes into the office – and call the name directly *(not using the telephone number listed on the contract of purchase and sale)*.  Verify the instructions to act on the sale.

    Scan the ID and compare the information with the actual address information in the phone book and/or Canada411.

    Insist on the proceeds of sale being made payable to the Vendor and not a third party. Vendors have bank accounts and are perfectly capable of depositing a lawyer’s trust cheque and cutting a cheque payable to whomever if they desire.  There should be no need to have the lawyer’s office act as a bank and enable a fraudster to pay the funds to a third party.

    Attune your antenna to pick up on vibes that just don’t ‘feel right’.  If the transaction appears questionable, then either refuse to act or start asking questions.  If you do think you have a fraudulent transaction, contact the Financial Crimes section of the RCMP or the Financial Crimes Section of the Vancouver Police Department.  Lawyers in BC  have no ethical duty to impostors and indeed, have a positive duty not to act in such a situation.   This is in s. 6 of Chapter 4 of the Professional Conduct Handbook:

    Dishonesty, crime or fraud of client

    6. A lawyer must not engage in any activity that the lawyer knows or ought to know assists in or encourages any dishonesty, crime or fraud, including a fraudulent conveyance, preference or settlement.

    [heading and rule amended 03/05; heading amended 05/05]

    After all, after the fraud has gone through it is a bit too late to try to turn back and make things right, especially with the all the light being cast on the transaction.

    This entry was posted on Tuesday, August 5th, 2008 at 2:19 pm and is filed under Fraud and theft, Issues facing Law Firms, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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