With the new Land Title ID check in place settlement agents are well on the way to stopping these fraudsters!

Courtesy of www.news.com.au

Australian property scams continue – real estate agency and settlement agents.

                                                                                                                                                       August 12, 2011

  A Perth couple who returned home to find their property had been sold without their knowledge or permission might not be the only victims of a real estate scam targeting absent owners.

The couple, who were living overseas, discovered their house had been sold only after they made a trip home to inspect the property.   A real estate agent has told investigators he received a phone call in February from a man claiming to be the owner.   The agent later received an urgent request to sell the property, in Ballajura, in Perth’s northeast, with the caller claiming funds were needed for a business investment, later described as a petro-chemical project.   Police have launched an investigation and are working with Consumer Protection and representatives from Landgate, the state authority responsible for the register of land ownership.   It is the second time in a year that Perth property has been sold while owners were overseas.   Roger Mildenhall’s $485,000 Karrinyup investment property was sold last year while he was in Cape Town after a real estate agent was conned by scammers posing as the owner.   Detective Senior Sergeant Pete Davies from the Major Fraud Squad said it appeared the scam had originated in Nigeria.   He said police were still in the early stages of the investigation and were examining computer, phone records and bank accounts.   “We are conducting a full criminal investigation with the view to try to identify and bring to justice those responsible,” he said.   “It’s difficult with the overseas connection, but we will do everything we can.”   Det Snr Sgt Davies said no one had been charged as yet in relation to Mr Mildenhall’s case.   Consumer Protection Commissioner Anne Driscoll said it was “worrying” and “distressing” to authorities that such a similar scam could happen again so soon.   She told reporters that the owners were in “shock” and had requested privacy.   “We can put in place checks locally to try to minimise this (fraud), but the unfortunate reality of our existence in the Australian community is that we are targets and this is another example of it,” she said.   Ms Driscoll said real estate and settlement agents should confirm the identity of absentee owners wanting to sell their properties and ensure the person they are dealing with was the rightful owner.   Ms Driscoll said the standard 100-point identity check used by banks and other institutions should be used when dealing remotely with clients.   Landgate Registrar of Titles Bruce Roberts told reporters the authority had processed about 280,000 transactions in the past nine months, of which 400 were for overseas clients.   Mr Roberts said Landgate would examine those 400 transactions to make sure no other properties had been sold fraudulently.   “It is impossible to eliminate fraud. Our actions are aimed at reducing the risk and minimising the chance of the fraud occurring,” he said.   Mr Roberts said Landgate had made changes to its internal processes since the previous scam and would continue to review the processes.   “We are learning from example to example … the scammers are getting better and we need to catch up with them,” he said.   Mr Roberts said he did not know if other fraudulent transactions had been processed but said that was why an investigation had to be conducted.   He said the person responsible for the “honest mistake” would be retrained.   Ms Driscoll said there was no evidence to suggest the agent involved in the transaction had failed to act with “due care and skill”.   However, it was a timely reminder for agents to be aware.   Ms Driscoll said that since the last scam was reported, an “extensive” government and industry education campaign had been conducted with real estate and settlement agents.   She said that that campaign had to continue to avoid future scams.   Real Estate Institute of WA chief executive Anne Arnold said real estate agents had already been sent an email reminding them of their obligations.   Ms Arnold said she supported stricter rules to make sure the likelihood of a similar scam occurring were minimised.   Source:   News.com.au   AREAP comments:  1.A written signed listing selling authority must be obtained by  real estate agents under the Real Estate and Business Agents Act in Western Australia. The owner must complete the details on the listing authority and sign the authority.  (Comment: It would be reasonable to assume any unusual information or suspicious information would be detected by the listing agent and the real estate office secretary who files the information? This could be a simple 2 level administrative check.)  2.The licensed listing real estate agency must obtain a recent certificate of title (CT) from Landgate confirming the correct legal owner.  The owners signature is not recorded on the CT. It will list the owners legal name and registered address only. (Comment if the legal owners address did not match with the listing authority address this would be unusual and could cause suspicion. This could be detected by the listing agent and the real estate office secretary who files the information? This could be a simple 2 level administrative check.)  3.The certificate of title will also list any registered mortgages over the property.  A registered mortgage cannot be discharged until the legal owners sign mortgage discharge documents with their lender. (Comment:  It would be assumed that the scammers are targeting property with nil mortgage and nil encumbrances.  So when the property is sold settlement can be achieved with less steps to take.  A property with an absent owner and nil mortgage on the CT should alert the real estate agency and the settlement agency to potential fraud risk)  4.The listing selling agent should conduct a 100 point ID check to confirm the identity of the seller.  To confirm that the person(s) presenting themselves as the sellers can provide a legal signature confirming their identity. (Comment:   This is recommended by authorities, but is not a legislative requirement under the REBA Act, so therefore is not enforceable.  There is no penalty if the real estate agency does not complete this check.  This could be legislated and could improve consumer protection)  5.Most sellers live in their property and are owner occupiers. It is relatively easy to identify the correct legal owner.  6.Other sellers are investors and may live in that city or interstate.  There should be simple checking procedures in place to confirm the identity of the investor owner.  7.Other owner occupier sellers may be living interstate and overseas.   If this is the case there should be a higher diligence process for the real estate agency, the settlement agency and Landgate to follow.  As this clearly represents a high risk situation if a checking process is not followed and fraud committed.  8.In order for the listing agent to sell the property they must gain access to the property with house keys and show the property at home open.  If the listing agent was suspicious of the absence of the seller they could simply ask the seller to describe the property internally and externally.  This may confirm that the seller owns the property.  9.When a willing buyer makes an offer on a contract for sale of land and property, this written offer must be presented to the seller.  The real estate agent would normally fax the written offer to the seller and call the seller on the telephone to discuss the offer.  Did the real estate agent actually speak to the alleged sellers on the telephone or just fax the contract through for signing? (please sign the contract so we can settle quickly and I can get paid!)  10.When an offer is accepted the seller and buyer must sign the final contract. Then the final contract is sent to the licensed settlement agency.  Settlement Agencies must be licensed under a Settlement Agents Act.  11.The seller must engage the settlement agent under a written authority and agreement to act on their behalf.  12.The settlement agency should also conduct a check of the identity of the legal owner prior to settlement.  The settlement agency will now also be in contact with the legal owner, communicating and corresponding. (Clearly the current legal checks are inadequate and could be improved?)  13.Prior to the final settlement a transfer of land document must be signed by the legal owner and submitted to the sellers settlement agency.  The sellers settlement agency will then lodge the ‘transfer of land document’ with Landgate.  14.Landgate should have a legal checking procedure in place to confirm the correct legal ownership and signature of the owner. Has this procedure occured in this case?  15.Also not forgetting that the buyer will have a seperate settlement agent and the buyers settlement agent could also have a checking procedure in place if the sellers details are unusual and suspicious?  There is probably no checking procedure in place?  16.It appears in this case of fraud that the listing real estate sales representative, the licensed listing real estate agency, the sellers settlement agent, the sellers licensed settlement agency and Landgate are all denying any accountability and responsibility in the checking process.  17.Let’s face it the real estate agency and settlement agency are probably more focussed on achieving settlement and getting paid than consumer protection?   18.Landgate may not have well developed checking procedures in place to adequately protect consumers. Landate is a government organisation and should improve their checking procedures.  19.If the Real Estate and Business Agents Act and the Settlements Agents Act does not legislate to offer more protection for sellers any future case of fraud will just be an interesting academic discussion.  All care, no responsibility and no accountability for the real estate agency, settlement agency and Landgate.  20.Of most importance we hope that the police are able to catch the fraudsters and they are bought to justice.  21.Otherwise Australia might be seen as a soft target and a bit of joke.  When a guy on the end of an e-mail address, a fax and a phone line can so easily defraud an Australian citizen?  After all a similar fraud and modus operandum occured in Perth 12 months ago.  22.Well done to the Australian legal system for being proactive and protecting it’s citizens from overseas