Real Estate Fraud Prevention Guidelines

Transcription

1 Real Estate Fraud Preventin Guidelines

2 Real Estate Fraud Preventin Guidelines Cntents 1. Intrductin 2 2. Backgrund 2 3. The Law 2 4. Cmmissiner s Guidance 3 5. Prescribed Dcuments 3 6. Cnfirming Identities f Vendrs r Representatives 4 7. Pssible Fraud Warning Signs 5 8. What Shuld be Dne if Fraudulent Activity is Suspected? 6 9. Privacy Requirements fr Persnal Infrmatin 6 Attachment 1 Prf f Identity Checklist fr Vendrs (r appinted representative) A divisin f the Department f Finance & Services July 2012 v3.0 1

3 1. Intrductin These Guidelines have been issued by the Cmmissiner fr Fair Trading and are intended t help real estate agents verify the identificatin f vendrs when dealing with clients in rder t prevent real estate fraud. 2. Backgrund Identity fraud and scams are increasingly prevalent thrughut the cmmunity and the prperty industry is nt immune t falling victim t such events. Tw highly publicised incidents in September 2010 and March/April 2011 resulted in prperties being sld in Western Australia withut the knwledge and cnsent f the lawful prperty wners. These sales were undertaken by real estate agents wh were cntacted by criminals masquerading as the true wners. In bth cases, the prperties were tenanted and being managed by a real estate agent n behalf f the registered prprietr, prir t a fraudulent request being made t sell the prperty. Cntact with the agent by the fraudsters was made by telephne in additin t ther frms f cntact. The persn masquerading as the wner ntified the agent f new cntact details which frmed the basis f future cntacts. These tw events highlight hw easily a fraud can cmmence and emphasise that agents need t be n high alert fr ptential fraudulent real estate transactins. 3. The Law Sectin 37 f the Prperty, Stck and Business Agents Act 2002 prvides that the regulatins may prescribe rules f cnduct t be bserved in the curse f the carrying n f business r the exercise f functins under a licence r certificate f registratin. Penalties apply fr breaches f rules f cnduct. The maximum penalty is 100 penalty units presently $11,000. In additin, disciplinary actin can be taken under the Act which can lead t licence cancellatin and disqualificatin. Rule f Cnduct tw in the Prperty, Stck and Business Agents Regulatin 2003 requires agents t cmply with the fiduciary bligatins arising as an agent. Rule f Cnduct three requires that an agent must act hnestly, fairly and prfessinally with all parties in a transactin. Rule f Cnduct fur requires that an agent must exercise reasnable skill, care and diligence. Rule f Cnduct six requires that the agent must act in the client s best interest at all times unless it wuld be cntrary t the Act r regulatins under the Act r therwise unlawful t d s. Sectin 191 f the Act prvides that disciplinary actin can be taken against the hlder f a licence fr, amng ther things, acting unlawfully, imprperly, unfairly r incmpetently while carrying n business r exercising functins under the licence r certificate f registratin. Disciplinary actin A divisin f the Department f Finance & Services July 2012 v3.0 2

4 can lead t a range f penalties ranging frm a cautin r reprimand, a mnetary penalty, t cancellatin f a licence and disqualificatin. Sectin 55 f the Prperty, Stck and Business Agents Act 2002 prvides that an agent is nt entitled t any cmmissin r expenses frm a persn fr, r in cnnectin with, services perfrmed by the licensee in the capacity f licensee fr r n behalf f any persn unless the services were perfrmed pursuant t an agency agreement signed by, r n behalf f, the persn and the licensee. Sectin 63 f the Prperty, Stck and Business Agents Act 2002 prhibits a real estate agent frm ffering residential prperty fr sale unless the required dcuments are all available fr inspectin at the real estate agent s registered ffice at all times at which an ffer t purchase the prperty may be made. Sectin 63 prescribes the situatins when an agent is cnsidered t ffer residential prperty fr sale, and sets ut the required dcuments which must be available. These dcuments include a cpy f the prpsed cntract fr the sale f the prperty and the dcuments required by sectin 52A f the Cnveyancing Act Cmmissiner s Guidance The licensee in charge shuld have adequate prcedures in place s as t ensure that prper prcedures are fllwed and all emplyees are aware f their respnsibilities under the Act. In their prcedures and in perfrming their duties, the agent shuld cnduct an identificatin check using the recmmended Prf f Identity Checklist fr Vendrs r appinted representatives (Attachment 1) r a similar dcument t shw that the client has satisfactrily prven that they wn the prperty. DOCUMENTS SHOULD BE RETAINED IN THE SALES FILE FOR INSPECTION IF REQUIRED. 5. Prescribed Dcuments The prescribed dcuments which must be included with the cntract fr the sale f the prperty are listed in Schedule 1 f the Cnveyancing (Sale f Land) Regulatin These dcuments include a prperty certificate. A cpy f this Regulatin can be accessed frm the Gvernment s legislatin website at A prperty certificate is a title search frm Land and Prperty Infrmatin relating t the prperty fr sale. The certificate describes the land using the lt and depsited plan. The first schedule n the prperty search sets ut the full name f the current wner f the prperty. The secnd schedule sets ut any ntificatins, including details f any mrtgagee, r any caveats n the prperty. A divisin f the Department f Finance & Services July 2012 v3.0 3

5 6. Cnfirming Identities f Vendrs r Representatives Agents shuld use the fllwing guidelines when selling a prperty t cnfirm the identity f vendrs (r appinted representative) in rder t prevent real estate fraud. 1. When selling a prperty, cnfirm that dealings are with the true wner(s) f the prperty (i.e. the registered prprietrs r their prperly appinted representative). While the Prperty, Stck and Business Agents Regulatin 2003 requires that the agency agreement must cntain a statement t the effect that the principal warrants that they have authrity t enter int the agreement, this may nt be sufficient t prtect an agent and they shuld ensure that this authrity is verified in sme manner befre acting fr the principal. In sme cases, the persn with the legal right t sell the prperty may nt be the registered wner. These wuld include but wuld nt be limited t: the hlder f a Pwer f Attrney r Enduring Pwer f Attrney; r an executr, a mrtgagee in pssessin, r a persn with an apprpriate Curt rder. In these cases, the riginal r a cpy that has been certified as a true cpy f the dcument cnferring the pwer f sale must be sighted and, where pssible, cnfirmed with the current registered wner that the persn is authrised t act n their behalf. Cnfirm the identity f the wner r the persn r persns with the legal right t sell the prperty via an identificatin check using the recmmended Prf f Identity Checklist fr Vendrs (r appinted representatives) r similar dcument (Attachment 1). When cnfirming the identity f the wner, the agent must: Check that the name n the agency agreement is the same as that n the prperty certificate if the wner is selling the prperty themselves. Cnduct the check face-t-face and riginal dcuments must be sighted by the agent t verify identity. Verify the vendr s identity frm an riginal primary phtgraphic identificatin dcument and an riginal r certified cpy f a secndary nn-phtgraphic identificatin dcument, as indicated in Prf f Identity Checklist fr Vendrs (r appinted representatives) (Attachment 1). Verify the legal wnership f the prperty frm an riginal r certified cpy f a primary prperty wnership dcument such as a prperty certificate, current rate ntice r ther dcument cnferring the pwer f sale. In verifying the infrmatin frm the relevant dcuments, the agent must be reasnably satisfied that: The dcuments are legible and d nt appear t have been altered in any way. There is n apparent discrepancy between the infrmatin cllected frm the agent and the infrmatin cntained in the dcuments (ther than a discrepancy that can be reasnably explained and supprted, such as a change f name r the wner f the prperty has recently been married). In the case f a primary phtgraphic identificatin dcument, that the phtgraph cntained in the dcument is a true likeness f the wner f the prperty. Prf f identificatin r legal wnership f prperty dcuments referred t in these guidelines d nt include dcuments that have expired (ther than in the case f an A divisin f the Department f Finance & Services July 2012 v3.0 4

6 Australian passprt that has been expired fr less than tw years r therwise nted in the Prf f Identity Checklist fr Vendrs (r appinted representatives)). Fr the purpses f these guidelines, a cpy f a dcument may be certified as a true cpy f the riginal nly by a persn authrised t take and receive statutry declaratins under sectin 21 f the Oaths Act If the persn r persns are nt directly available (fr example, if they are verseas), the riginal dcuments shuld be sighted and verified as a true cpy f the riginal by a suitable independent witness such as a Justice f the Peace r a Ntary Public. In additin, the witness shuld verify that the physical identity f the persn matches that shwn in the primary phtgraphic identificatin dcument. 2. Ensure that yu cntinue t deal with the registered wner r their prperly appinted representative. Agents shuld be particularly cautius in situatins where n mrtgagee is listed n the secnd schedule. This is because fraudsters knw that mrtgagees such as banks have stringent security measures in place t stp fraud. Fraudsters target prperties which are whlly wned by the wner. Agents shuld be especially vigilant if the client is verseas r remte, r if dealings with that persn are nt face-t-face. Pre-establish security questins with cnfirmed answers that nly the wner will be able t answer and which are asked fr at every material cntact. Crrespnd nly t addresses (pstal r electrnic) held n the sales file, which are already knwn t be genuine. If an wner changes their cntact details, cnfirm new cntact details and addresses by crrespnding with all f the wner s riginal and new cntact pints. Seek riginal rather than facsimile r scanned PDF signatures. Carefully check signatures f prperty wners against riginal signatures held n file. When replying t an , type the knwn genuine address frm yur agency files rather than simply clicking the reply buttn. An may have a hidden address in it. 7. Pssible Fraud Warning Signs Pssible real estate fraud can be identified when the fllwing warning signs present themselves: A recent change in address r ther cntact details which have nt been prvided until instructins t sell a prperty are received. The transactin invlves peple lcated r dcuments issued verseas, especially frm cuntries knwn fr scams. There is a request fr funds t be sent t a different bank accunt t that nrmally used by the client including but nt limited t ffshre accunts. Advice is received that the sale is urgent, fr example because f an verseas investment pprtunity. A divisin f the Department f Finance & Services July 2012 v3.0 5

7 New addresses are generic such as Htmail, Yah r Gmail. Cmments by the seller that if this sale is successful r quick, future wrk r ther incentives will be prvided t the agent. 8. What shuld be dne if fraudulent activity is suspected? Agents wh suspects real estate fraud must: cntact the NSW Plice r NSW Fair Trading; and nt act n the sale f the prperty. Licensees in charge must have dcumented prcesses and prcedures t ensure that the prcess f identifying principals is prperly dcumented and that all emplyees are aware f, and use, these prcesses and prcedures. Agents shuld retain cpies f all dcuments btained in the prcess f verifying identities and in verifying the authrity f a persn t act in the sale f the prperty. These shuld be retained in the apprpriate sales file fr later inspectin if required. 9. Privacy Requirements fr Persnal Infrmatin Sme f the infrmatin cllected abut clients t cnfirm identities may be persnal infrmatin. The Natinal Privacy Principles enacted under the Cmmnwealth Privacy Act 1988 will be applicable t sme agents and fr thers, the principles prvide sme guidance n the issues which agents shuld cnsider in cllecting, string and managing client infrmatin. Licensees in charge must ensure that apprpriate security is given t the strage f any cpies f identificatin dcuments that are held. A divisin f the Department f Finance & Services July 2012 v3.0 6

8 ATTACHMENT 1 Prf f Identity Checklist fr Vendrs (r appinted representative) Vendr name: Prperty Address: ❶ Primary Prf f Identity dcuments (riginals nly): The vendr (r representative) must prvide ne dcument frm the fllwing list. The riginal dcument must be sighted. The dcument must shw the individual s name, day, mnth and year f birth, current phtgraph and signature. Place an X in the bx f the dcument prvided. A current Australian pht driver s licence r ther current pht card issued by a State r Territry Gvernment agency. A current Australian passprt A current nn-australian passprt Enter details f the dcument prvided: Dcument Type Eg. Australian Passprt Dcument number Date f issue (DD/MM/YYY) Expiry date (DD/MM/YYY) Place f issue Original dcument sighted by (please print name) ❷ Secndary Prf f Identity dcuments (riginals r certified cpies): The vendr (r representative) must prvide tw dcuments frm the fllwing list. The riginal dcuments must be sighted. The dcuments must shw the individual s name, signature and residential address where applicable. Place an X in the bx f the dcument prvided - (ne f these dcuments must be prvided). A current Medicare card OR A current credit card Place an X in the bx f the dcument prvided - (at least ne dcument frm this list t be prvided). A current passbk r accunt statement frm a bank, building sciety r credit unin up t 1 year ld An electral enrlment card r the evidence f enrlment nt mre than 2 years ld A gas r electricity bill up t 1 year ld Water rates up t 1 year ld ❸ Prf f Legal Ownership f Prperty (riginal r certified cpy) must be prvided by the vendr (r representative): The riginal dcument r a certified cpy must be sighted. The dcument must shw the prperty s residential address and vendr s name. A current rate ntice up t 1 year ld (r land valuatin ntice up t 1 year ld) Declaratin: I have sighted and cnfirmed the Prf f Identity dcuments against riginal dcuments prvided by the vendr (r appinted representative). / / Name f Agent Agent s Signature Date A divisin f the Department f Finance & Services July 2012 v3.0 1