Owning property has long been the Australian dream and regarded as a pretty safe investment.
But a number of Australians have been hit by criminals who have sold their house through simple identity fraud, then pocketed the profits and disappeared.
Recently a house in the Canberra suburb of Macgregor was offloaded through a South African-based real estate scam without the owner’s knowledge. The owners, who are based overseas, only discovered their investment property had been sold when they contacted their property manager to query why rental money hadn’t been paid. Canberra Police are now investigating a series of exchanges which resulted in the fraud and the disbursement of funds.
“The absence of the home owner and an inability to personally review documentation which may be fraudulent provides leverage for the scammers to operate. Police would urge home owners residing overseas or travelling overseas for a lengthy period to establish robust protocols which protect and confirm their bona fides,” ACT Police said in a statement.
In late July a 46-year-old man was charged with fraud after allegedly falsifying his identity to sell two Gold Coast homes which didn’t belong to him.
Earlier this year NSW Fair Trading Minister Stuart Ayres issued a warning to property owners and real estate agents about scam emails being sent to landlords living overseas.
“The scam email advises agencies of managing landlords to forward forms to them to complete and return to the scammer,” he said.
“The forms require detailed personal information as well as photocopies of passports and mortgage account numbers.”
A run of these types of scams resulted in a group of Western Australian property owners being defrauded of their properties. Earlier this year three people were charged in South Africa over the attempted sale of a $240,000 unit at Perth suburb Mandurah.
Allegedly the trio changed the owner’s contact details and subsequently made a request to sell the property. An offer was received for the property but the scam unravelled when a contract was sent to the rightful owner – luckily by mail, and before deeds or funds had changed hands.
Peter Cutajar, national manager for insurer First Title, told Business Insider: “It may be that the Canberra one will be one of a few, and we might not know about it yet because what they’ve been doing is targeting owners that live overseas.”
Cutajar said there was a real risk in Australia’s property market of scammers stealing their title and selling or mortgaging their property without their knowledge.
“If an organised crime group is going to do some, they do some, they don’t just do one,” he said, adding “most of the property, if not all of them were unencumbered properties.”
He said it all starts with identity fraud. The scammer acquires fake birth certificates, Medicare cards, passports and drivers licences in the home owner’s name. Cutajar said the forms of identification only need to look real because a real estate agent or solicitor are only going to sight the documents.
Discovering your house has been fraudulently sold to an innocent buyer makes recourse complicated and difficult.
“In almost all of the cases it has resulted in litigation,” Cutajar said.
“In some instances they may go against the owner, in some instances they may go against the real estate agent that sold it.
“What they have to do is exhaust litigation and then go to the Torrens title insurance fund.”
But the complexity of the fraud and the number of parties which in most cases are innocently involved – the real estate agent, solicitor, buyer and owner – makes it hard to retrieve the money.
“The money is transferred out of the country within 12, 24 or 36 hours,” Cutajar said.
“Once it hits an offshore account it gets transferred from one account to another.
“Often the settlements are on Friday…if it happens on Friday you’re two or three days ahead before anyone finds out because of time zones and because of the weekend.”
Two ways to defend against it, Cutajar said, are taking out title insurance, and never acting for yourself, but instead instructing a solicitor or conveyancer, and involving a real estate agent.
The New South Wales Office of Fair Trading last year released guidelines for real estate agents outlining ways to spot fraudsters.
Warning signs include recent contact detail changes, international documents from countries “known for scams”, a request for funds to be transferred overseas and offering incentives for a quick sale. There’s more on that here.
After the Canberra real estate fraud the ACT’s Attorney-General Simon Corbell is warning agents to be vigilant.
“These professionals need to exercise due diligence in all transactions. Particularly when dealing with overseas transactions, check if you are in doubt,” he said.
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