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Property fraud is estimated to cost Australians hundreds of millions of dollars each year, with scammers stealing owners’ identities and profiting from illegally selling their property. Find out how to protect your clients.

By Nancy Rainbird 

Real estate agents need to understand a wide range of regulations and legislation that affect the property industry to ensure they are in the best position to advise their clients. But this doesn’t necessarily protect an agent or their client against fraudsters.
There are numerous scams out there that have seen the sale or re-mortgaging of a property without the owners’ consent. These often include agents being duped by email or phone calls to enable the scam to happen, and can lead to them being held liable.

This is what happened in Western Australia, where an agency was reprimanded by Consumer Protection WA after they were almost tricked into selling an overseas client’s home. The case unfolded after fraudsters managed to trick the agency into falsely updating the South African-based owner’s email and telephone number in their database.

The scammer then requested the property be sold, which resulted in an offer being accepted. Fortunately, the fraud was uncovered when the real owner received a copy of the listing agreement that was sent to her home address in South Africa. Because the agency failed to verify the updated contact information using the owner’s original details, they were reprimanded for not exercising due skill, care and diligence. 

Another way that scammers seek to take advantage is by stealing an owners’ identity. Some do this by sending out letters to agencies to forward on to their landlords living overseas, offering them tax exemptions on rental incomes. The forms require detailed personal information, including photocopies of passports and mortgage account numbers.

There are also instances of fraudsters using another person’s name and date of birth to acquire a fake credit card, driver’s licence and Medicare card, which are then used to trick mortgage brokers into processing mortgages. 

So you need to take precautions to minimise the risks and to avoid a professional indemnity claim being made against you. There are already enough risks as an agent, so it’s important to be on your guard when you receive sale or re-mortgage requests as they might not be as innocent as they sound.

Minimising the risks

• Meet with your client in person.
• Find out as much information as possible about your client.
• Only deal with original documents.
• Test all phone numbers and check any changes with your client.
• Owners may consider title insurance to protect against risks such as fraud and forgery.

 

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While care has been taken in preparing this article, and the information in it has been obtained from sources that Realcover believe to be reliable, Realcover does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose that the article may be used. Realcover accepts no liability for any loss or damage (whether caused by negligence or not) resulting from the use of this article.