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Monday Jun 12, 2017

Property fraud on the rise

Property fraud is on the rise and buyers and sellers should be extra vigilant

There are different types of property fraud taking place, says Chris Tyson, CEO of Tyson Properties.

A property owner wanting to sell his property may learn an imposter obtained his signature for what he thought was a bank loan, only to find out that the imposter sold his property to a third party.

Then there’s the problem of purchasers falsifying documents such as pay slips to secure bond approvals. When this is uncovered and a bond approval is retracted, the sale falls through.

In such instances, costs incurred by sellers, estate agents and conveyancers remain unsettled.

The fastest-growing property fraud is digital, says Tyson.

Tim Akinnusi, executive head: sales and client management in home loans at Nedbank, says property fraud is a real threat. One of the most common is hacking into emails or redirecting funds to new beneficiary accounts.

Darren Brander, a director and conveyancer at national law firm Smith Tabata Buchanan Boyes, agrees it is becoming increasingly common for fraudsters to intercept or simulate communications between their clients or between attorneys and their clients in property- transfer transactions.

He believes property-related fraud has increased over the past three years because deposits paid on property transactions and the proceeds of a sale represent significant amounts of money.

"Often buyers are requested to pay the deposit on a property transaction into an attorney’s trust account or into the agent’s trust account just after acceptance of an offer.

"Fraudsters have found ways to intercept these requests and use the details to create alternative emails which look like those sent by agents or attorneys. These advise the client of a change in banking details."

Clients are then asked to pay the deposit into the "new" banking account.

He says fraudsters seem to be aware when property transactions are about to be registered.

"The same modus operandi seems to be applied with regard to the communication between the attorney and the client when arranging payment of the purchase price to the seller, after registration. It is during this period that sellers, buyers, agents and attorneys must be most vigilant," he warns.
Brander suggests buyers and sellers ask for verification of the bank account into which any funds are being paid.

He says emails requesting a change of banking details should be viewed with suspicion.

All requests made via email should be checked against previous mails received from the same supposed sender. Fraudulent mails are often sent from accounts that are similar but never identical to the original email addresses.

Brander acknowledges that face-to-face meetings are not always practical. However, he says important documents should at all times be signed in person, and verification of bank details must always be completed.

"We regularly advise clients that we never send an email requesting a change of banking details," he says.

Akinnusi says banks are also urging clients to never disclose material information online.

"As much as possible, share critical information in person only," he says.

He says that, even in person, clients should make sure an offer to purchase is comprehensive and all critical information is included, especially all details of buyer and seller and the address of the property.

Tyson says the risk of fraud is not confined to home loans.

"Cash deals, no matter how enticing, can also pose great risks. Always insist on a deposit prior to occupation."

Brander concurs: "An unwitting seller may believe the cash deal to be secure, but he is in an unenvious position if the purchaser insists on only parting with his cash after transfer into the purchaser’s name is effected. The seller then risks not being paid at all, after allowing ownership to pass."

Akinnusi advises both buyers and sellers to use only registered and reputable estate agents and approved conveyancers.

"Choose an estate agent affiliated to a registered brand and ask questions about their affiliations, registrations and qualifications. Ask to see proof of certifications, VAT numbers and tax registrations."

Independent Property
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