FINANCIAL ELDER ABUSE IN REAL ESTATE TRANSACTIONS September, 2012 By: Kelly L. Greenwood Burchells LLP Barristers & Solicitors

Rapid Expansion of Fraud  First Canadian Real Estate Title Fraud Claims  2000 – 6% of total dollars paid in claims  2005 – 33% of total dollars paid in claims  Average loss $300,000

Why has real estate fraud grown so rapidly ?  The advent of the internet  The move to electronic Land Registries  De-personalized mortgage lending  Increased competition among mortgage lenders  Competitive pressures to close a deal quickly

Nova Scotia Property Online Parcel Register Information  Registered owner(s)  Address of property  Address of owner(s)  Assessed value information  Burdens, benefits, recorded interests (including mortgages)  Links to surveys

Types of Real Estate Fraud  Title fraud by identity theft  Title fraud by forgery  Forclosure fraud  Value/Flip fraud

Identity Theft  Most Common – Impersonation of true owner  Forged identification  Abuse of similar names  Impact of Know Your Client Rules/FINTRAC and Money Laundering Laws

 Forged identification documents  Forged or altered Powers of Attorney  Fraudster uses those to transfer property, or register forged discharge, and borrow money on security of the property  Fraudsters may impersonate lawyers Fraud by Forgery

Forclosure Fraud  Fraudster convinces financially struggling homeowner to transfer property title and make payments to fraudster in return for fraudster’s promise to “consolidate loans”  Upfront and ongoing fees not used to pay debts  Fraudster may also sell or mortgage property

Value/Flip Fraud  Back to back closings  Second purchase at higher inflated price  High ratio mortgage on second purchase  Fraudster doesn’t pay mortgage  Also, amendments to Purchase and Sale Agreements with large credits which are not disclosed to lenders

The Elderly are attractive targets  More likely to own home without a mortgage  Reverse Mortgages  Theft of proceeds from a legitimate sale  Not knowing what they are signing  Availability – often home alone

Prevention by professionals  Know your Client Rules  Independent identification verification  Check property ownership history  Ask for Deeds plus other documents  Consider bonding employees  Good internal controls

Prevention by the Elderly (and others)  Protect against identity theft  Check Land Registry office to verify title and mortgages  Check credit reports  Consider title insurance  Obtain independent legal advice  Never sign anything you don’t understand

Remedies for fraud victims  Civil action if fraudster can be identified in time  Criminal charges  Title insurance payout if fraud established  Government fund (e.g. BC, AB, MB and ON Assurance Funds)

Questions? Kelly L. Greenwood (902)