Understanding Fraud in Real Estate Transactions: A Legal Perspective

 
LAW ASSOCIATION
SEMINAR
Fraud in Real Estate Transactions
Involving Identity Theft
 
 
 
 
 
 
 
 
 
Presented by Ashmead Ali
19
th
 January, 2018
 
1
 
INTRODUCTION
 
2
 
INTRODUCTION
 
Some types of fraud that can occur in real estate transactions:
Stamp Duty Fraud- 
where the State is cheated of Stamp Duty through the
understatement of the full consideration paid for real estate.
Fraudulent Misrepresentation- 
i.e. cases where:
A “vendor” shows a particular property to a buyer but by the actual
agreement for sale and conveyance he sells and conveys another property
which he owns;
A “vendor” who intends to acquire a property enters into an agreement to
sell this property before he acquires the title but does not disclose this to
the purchaser;
A “vendor” impersonates the true owner of a property (
Fraud Involving
Identity Theft
)
N.B
. 
When someone purchases property from a “fraudster”, invariably the
purchaser and/or his mortgagee bears the loss.
 
3
 
OUTLINE
 
Responsibilities and Liabilities of Attorneys acting for Vendors
and/or Buyers in:
Breach of Contract/Negligence
- Where there has been a breach
of contract or duty of care by an attorney;
Breach of Trust- 
When attorneys hold purchase moneys in a
conveyancing transaction, they may be deemed to do so as
trustees and will have the fiduciary obligations imposed on
trustees.
 
4
 
OUTLINE
 
Purrunsing v A'Court & Co (A Firm) [2016] EWHC 789 (Ch)
(Purrunsing”);
P & P Property Ltd v Owen White & Catlin LLP and another
[2016] EWHC 2276 (Ch) 
(“P&P”);
Dreamvar (UK) Limited v Mishcon De Reya (a firm) and Mary
Monson Solicitors Limited [2016] EWHC 3316 (Ch) 
(“Dreamvar”).
 
 
 
5
 
Breach of Contract/Negligence
 
“The fundamental nature of the duty of a solicitor is the duty to
exercise reasonable care and skill in the course of professional
activity, whatever other obligations he may have. The standard has
been described as that of an ordinarily competent solicitor. 
He owes
a duty to his client both in contract and in tort, and he may be liable
to a third person for the tort of negligence.”- (
CORDERY on Solicitors
Issue 39, 9
th
 Edition pg. I/301-I/303
).
 
6
 
Breach of Contract/Negligence
 
“A solicitor has a duty of care to inform of any potential risk to his
client that he is aware of, even where he has not been expressly
instructed in relation to the risk” (
Credit Lyoynnais SA v Russell
Jones & Walker [2002] EWHC 1310 (Ch)
).
 
7
 
Breach of Contract/Negligence
 
 
In normal conveyancing transactions attorneys who are acting
for a seller do not in general owe to the would-be buyer a duty of
care when answering inquiries before contract or the like. (
Gran
Gelato v Richcliff [1992] Ch 560
).
 
 
8
 
Breach of Contract/Negligence
 
Special Cases where where this general rule does not apply and a duty of care will
be owed by the solicitors to the buyer:
 
Where the solicitors stepped outside their role as solicitors for
their client and accepted a direct responsibility to the lender.
(
Gran Gelato v Richcliff [1992] Ch 560
);
A vendor’s attorney will be held to owe a duty of care to the
purchaser where there are special circumstances which result in
him accepting a direct responsibility to the purchaser to take
reasonable care to ascertain the identity of the vendor or to
ensure that he is the true owner of the property being sold;
 
 
 
9
 
Breach of Contract/Negligence
 
In 
Purrunsing 
t
he Court held that the buyer’s solicitor was liable
to the buyer for 
breach of contract and negligence
 because he
failed to advise his client, the buyer, that he had information that
posed a risk to the client.
 
 
10
 
Breach of Contract/Negligence
 
The buyer’s solicitors asked the seller’s solicitors to confirm they were
familiar with the sellers and would verify that they are the sellers and
check ID to support same.
The seller’s solicitors responded in the following terms:
As explained to you over the telephone, prior to being approached to act
on the sale we have no personal knowledge of Mr Dawson, but we confirm
that we have met him in person and have seen his passport (and retain a
copy of the photo page) together with utility bills etc. showing his UK
address as notified to us.”
The court held that the buyer’s solicitor ought to have known that the
answers were unsatisfactory, and ought to have told the purchaser of the
unsatisfactory responses received and advised the purchaser not to
proceed with the transaction until satisfactory responses had been
received.
 
11
 
Trust
 
When an attorney at law engaged in real estate transactions holds
money for a purchaser of property, he is regarded as a trustee and as
such will have the fiduciary obligations associated with a
trustee.(
Purrunsing
)
;
If he pays out the purchase money to a fraudster who is impersonating
the true owner of the property this would amount to a breach of trust
and he may be liable for the loss suffered by the purchaser
;
The attorney would not necessarily be liable to his client (the purchaser)
because the 
Trustee Ordinance Ch. 8 No.3 at section 62 
gives the court a
discretion to grant the attorney relief where he has acted “honestly and
reasonably and ought fairly to be excused for the breach of trust.”
(same as 
s.61 of the English Trustee Act
)
 
 
 
 
12
 
Trust
 
As stated by the judge in 
Purrunsing 
at paragraph 38(i):
“The reasonableness test that is applied to a solicitor who parts with
completion monies without obtaining completion is necessarily a high one
because of the need to interpret s.61 consistently with equity’s high
expectation of a trustee discharging fiduciary obligations…It is therefore
one which requires the solicitor concerned to have acted  ‘…with exemplary
professional care and efficiency…’ and to be ‘…careful, conscientious and
thorough…’…though the test remains one of reasonableness not
perfection…”
 
 
 
 
13
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“In Purrunsing…the seller’s solicitor was unaware that the seller
was not in fact the true owner of a property…and purchase monies
were transferred. Both sets of solicitors in the transaction were
found to be in breach of trust: the duty not to release purchase
monies before legal completion is an absolute one, and as the
relevant property transfer deed was forged, legal completion had
not in fact taken place…”
 
 
14
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“Both firms sought relief under section 61 of the Trustee Act 1925
[s.62 of T&T’s Trustees Ordinance], a statutory provision that allows
a court to relieve a trustee from liability where they have ‘acted
honestly and reasonably and ought fairly to be excused for the
breach of trust’. His Honour Judge Pelling refused to grant relief.
The supposed seller of the property had provided an address
different to that of the property and to that of the alternative
service address as stated on the Land Registry register, and the
seller’s solicitor had made no proper attempt to…”
 
 
15
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“…carry out ‘risk-based due diligence and comply with anti-money
laundering regulations’. Importantly, no documentation was
obtained linking the seller to the property. Similarly, the buyer’s
solicitor should have been more alert and not satisfied with the
answer they received on whether the seller was entitled to sell the
property, and they should have communicated this concern to their
client. Both sets of solicitors were found to bear equal
responsibility for the loss suffered by the buyer.”
 
 
16
 
Duties of Attorneys acting for Vendors and Purchasers:
 
In 
Purrunsing
 and other recent English cases on real estate fraud involving
identity theft, the Courts have looked to the observance by solicitors of the
English Proceeds of Crime Act and associated anti-money laundering
regulations (which are designed to combat money laundering and
terrorism financing) as a key factor in determining whether solicitors have
acted 
reasonably
, and, as a consequence, ought possibly to be excused for
their breach of trust.
Attorneys in Trinidad and Tobago are required to observe similar standards
under our Proceeds of Crime Act Chapter 11:27 (POCA) and Anti Money
Laundering guidelines issued by the Financial Intelligence Unit. As noted
in 
Purrunsing,
 the Court held that the solicitors did not act reasonably
because they failed to adopt a risk based approach to client due diligence
as required by their POCA.
 
 
17
 
Duties of Attorneys acting for Vendors and Purchasers:
 
The court found that if the solicitors had adopted a risk based
approach several red flags based on the facts of the case would
have alerted them to the possibility of fraud. These were:
the property was vacant;
the property was not charged (mortgaged);
the property was of a reasonably high value;
the purported seller was based abroad;
the purported seller was pressing for an unusually quick
completion;
 
 
 
 
18
 
Duties of Attorneys acting for Vendors and Purchasers:
 
no instructions were sought by the seller’s solicitor as to why his
residential address supplied was not the same address as the sale
property;
no documentation was asked for or supplied showing the link
between the fraudster and the property including utility bills.
the purported seller failed to provide any documentation actually
linking him to the property;
the purported seller denied that any building work had been carried
out at the property during his period of ownership, and this was
inconsistent with the Local Search result; and
the purported seller had aborted an earlier potential sale when he
had been pressed for information about his employer.
 
 
19
 
Duties of Attorneys acting for Vendors and Purchasers:
 
 
There was no allegation or evidence of dishonesty by the
solicitors. However, the fact that the seller’s solicitor failed to
carry out money laundering/identity checks in accordance with
reasonable practice; and the fact that the buyer’s solicitor failed to
report gaps and discrepancies in the information provided by and
about the purported seller and about the property*, meant that
neither solicitor had acted reasonably.
*i.e. the buyer’s solicitor was found to be in breach of contract and negligent [see slides
10 and 11]
 
20
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“The decision in Purrunsing contrasted with that of P&P…later the
same year, with the purchaser (P&P) failing in its claim against the
fraudulent seller’s solicitor, as well as the estate agent. Similar to
Purrunsing, P&P involved a vacant property, which a fraudulent
seller claimed he owned. When the true owner discovered what
had happened, P&P brought a claim against Owen White & Catlin
(OWC)…”
 
 
21
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“…as well as the estate agent... Robin Dicker QC, sitting as a
deputy High Court judge, ruled that the solicitor checks were
designed to reduce the risk of fraud, but could not eliminate it…The
court in P&P distinguished Purrunsing on the basis that different
versions of the Law Society’s Code for Completion by post were
used in the two cases: in Purrunsing, the 1998 version was used,
which requires the funds being held on trust until satisfactory
completion, whereas in P&P, the less stringent…”
 
 
22
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“…2011 version was used, which contains wording to the effect that
if completion takes place straight away, then the completion
monies are not held on trust by the seller’s solicitor. While the
decision in P&P was welcomed by conveyancing solicitors for its
pragmatic stance, their relief proved short-lived: not only has leave
to appeal been granted, but a few months later, came a decision
which has seemingly placed greater responsibility on a buyer’s
solicitor to verify the seller’s identity…”
 
 
23
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“…The decision in Dreamvar…involved a successful claim against
City firm Mishcon de Reya by a client purchaser. Dreamvar based
its claim against Mishcon on negligence for failing to seek an
undertaking from the seller’s solicitor that it had taken reasonable
steps to establish the client’s identity, as well as failing to identify
features of the transaction which suggested an increased risk of
fraud. The second part of the claim was based on breach of trust…”
 
 
24
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“…Separately, the purchaser also brought a claim against Mary
Monson, the seller’s solicitor, for negligence, breach of warranty of
authority and breach of an undertaking that it had authority from
the real owner of the property. The court dismissed all allegations
of negligence against Mishcon. In particular, it rejected the
argument for an undertaking, holding that this was contrary to
standard practice in the profession. However, Deputy High Court
Judge, David Railton QC, did allow the claim for breach of trust
against Mishcon, holding that it was an implied term of the…”
 
 
25
 
Duties of Attorneys acting for Vendors and Purchasers:
 
M. Shahid “Fighting Words” Law Society Gazette 
(9
th
 June, 2017)
:
“…retainer that it would only release purchase monies on
completion of a ‘genuine purchase’. Furthermore, it was not
entitled to relief from breach under section 61 of the Trustees Act.”
 
 
26
 
Duties of Attorneys acting for Vendors and Purchasers:
 
In 
Dreamvar
, the judge stated as follows:
the effect of the breach of trust on the buyer had been disastrous. It
lost the purchase price, and in return received nothing. It did not have
insurance, or any ability (or knowledge) to enable it to self-insure
against the risk of fraud, of which Mr Vardar (the buyer’s sole
shareholder and director) was unaware;
 
Mischon was insured for events such as the one in this matter and its
insurance cover was sufficient to cover in full the loss suffered;
 
27
 
Duties of Attorneys acting for Vendors and Purchasers:
 
 
In terms of balancing the relative effects or consequences of the
breach of trust, it was apparent that Mischon (with or without
insurance) was far better able to meet or absorb the loss than the
buyer;
 
Although it was not unreasonable for Mischon not to have
advised the buyer about the risk of fraud, or to have sought
greater protection for the buyer against that risk (such as further
undertakings), it was also not irrelevant that Mischon was
necessarily far better placed to consider, and as far as possible
achieve (a matter not in the event tested), greater protection for
the buyer against the risk which in fact occurred;
 
 
 
28
 
Duties of Attorneys acting for Vendors and Purchasers:
 
 
The buyer had no recourse against the seller’s solicitor, and (it
appeared) no practical likelihood of either tracing or making any
recovery from the fraudster. As a result, the only practical remedy it
had was against Mischon.
In the case against the seller’s solicitor, the court held that the seller’s
solicitors (MMS) also held the completion moneys on trust for the
buyer but was permitted to release the moneys to its client for the
purpose of completion even though there was no actual completion of
a genuine purchase.
As such, the court found that the seller’s solicitors were not in breach
of trust.
This case has been widely criticised. Although the Court did not find
fault with Mishcon’s conduct, it still used its discretion to hold them
liable. The Law Society is considering intervening in the appeal.
 
 
29
 
Local Practice:
Trust
 
Common in England that the purchase money in property sales are
paid to the buyer’s solicitors who would hold the funds in their clients’
account and at completion pay them to the vendor’s solicitors who
would then hold the funds in their clients’ account before disbursing to
the vendor. In both cases therefore, the solicitors were clearly
trustees.
Trinidad and Tobago- the current practice is different so that (with few
exceptions*, the purchase money (or loan money) is not held by either
the buyer’s attorneys or the vendor’s attorneys but rather paid by the
buyer or his lender directly to the vendor (or his mortgagee where
appropriate) – attorneys would not usually be trustees.
Question: Would this result in the vendor’s attorney and the
purchaser’s attorney being considered as trustees?
 
 
30
 
GUIDELINES FOR COMBATTING
REAL ESTATE FRAUD
INVOLVING IDENTITY THEFT
 
 
31
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
1.
 
Property Owners
Persons who own real estate, especially vacant land should
visit their properties regularly to see if there are
unauthorised persons in occupation.
2.
 
Pre-Sale Signs
 Real estate agents should place a sign on the property stating “For
Sale” and give their contact information on properties being sold.
 
32
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
 
3.
 
Visits
Real estate agents, purchasers, and valuation surveyors
should visit the property being sold and where possible
speak to neighbours who can give information on the
identity of vendor. Mortgagees should also have their site
inspectors do so.
4. 
After Sale Signs
Immediately upon the execution of the agreement for sale of
property the real estate agent or the purchaser should place a
sign on the property stating that the property has been sold and
giving his/her contact information.
 
 
33
 
GUIDELINES FOR COMBATTING REAL ESTATE FRAUD
INVOLVING IDENTITY THEFT
 
5. Anti-Money Laundering Guidelines
As noted, attorneys engaged in real estate transactions are urged to
observe the Anti-Money Laundering Guidelines of the Trinidad
and Tobago Financial Intelligence Unit (FIU) and adopt a risk
based customer due diligence.
 
34
 
GUIDELINES FOR COMBATTING REAL ESTATE FRAUD
INVOLVING IDENTITY THEFT
 
6. Identification 
(continued)
Due Diligence (English Money Laundering Regulations):
“Reg 5(a)…identifying the customer and verifying the
customer’s identity on the basis of documents, data or
information obtained from a reliable and independent
source…and by Reg 5(c) as “obtaining information on the
purpose and intended nature of the business relationship.”
Repeated: paragraphs 3.1 and 3.3 of the Financial Intelligence
Unit’s Customer Due Diligence Guide No. 1 of 2011 and they
are based on the Trinidad and Tobago POCA and Financial
Obligations Regulations 2010.
 
35
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
Identification 
(continued)
 
Buyers and their attorneys should verify the bona fides of vendors
(and real estate agents) who offer to sell them real estate. Unless
they know a vendor and real estate agent personally they should
ask them to produce two forms of government issued picture IDs,
one of which should be a National ID Card or Passport.
Identification documents should be checked for their date of issue
which should not be a weekend day or public holiday.
 
36
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
Identification 
(continued)
In the case of vendors who are companies, buyers should have a search
done of the company at the Companies Registry and ask for one or
more directors to provide similar government issued IDs. Established
corporate property developers and public companies may be excepted.
7. Bank Reference Letters
It is also recommended that vendors should be asked to produce bank
reference letters certifying that they are known to the bank.
8. Swearing of Affidavits in presence of Commissioner
Attorneys and Commissioners of Affidavit should ensure that the witness
proving execution of the deeds by the vendor swears the affidavit in the
presence of the Commissioner and provide similar forms of ID (
Section 11 of
the Registration of Deeds Act Ch.19:06
).
 
37
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
9.  ‘
Google’ Name of Vendor
It is also good practice to ‘Google’ the names of vendors. This can
sometimes turn up information useful in identifying vendors and
their ‘history’.
 
38
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
Trinidad and Tobago Anti-Money Laundering and Counter
Financial Terrorism Guidelines 
Red Flags:
(1) 
Excessively obstructive or secretive client
 
a) Client appears to have dealings with several Attorneys-at-Law for
          no apparent reason.
b) Client is accompanied and watched.
c) Client presents confusing and inconsistent details about the  transaction.
d) Client over-justifies or explains the transaction.
e) Client is secretive and reluctant to meet.
f) Client is nervous, not in keeping with the transaction.
 
 
 
39
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Excessively obstructive or secretive client 
(continued)
 
g) Client’s mobile, home or business telephone number 
 
has been disconnected
           or there is no such number when an attempt is made to contact client.
 
h) Client insists that a transaction be done inordinately quickly.
 
i) Client uses aliases and a variety of similar but different addresses.
 
 
40
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Excessively obstructive or secretive client 
(continued)
 
j) Client does not want correspondence sent to home address and uses a Post
          Office Box or General Delivery address, instead of a street address when
          this is not the norm for that area/type of business.
 
k) Client offers you money, gratuities or unusual favours for the provision of
           services.
 
l) Transaction seems to be inconsistent with the client’s 
 
apparent financial
          standing or usual pattern of activities.
 
41
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
 
(
2) 
Transactions involve unusual levels of funds or cash
 
Client seeks to conduct large transactions with cash.
 
(3) 
Client is reluctant or vague in relation to identity documents
 
a) Client produces seemingly false identification or
 
identification that appears to be counterfeited, altered
 
or 
 
inaccurate.
 
b) Client refuses to produce personal identification
 
documents or only submits copies of personal
 
identification documents.
 
c) Client wants to establish identity using something other
 
than his or 
 
her personal identification documents.
 
42
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
Client is reluctant or vague in relation to identity documents
 (continued):
     d) Client refuses or appears particularly reluctant, or delays to provide the
          information requested without reasonable explanation.
     e) Client’s area of residence is not consistent with other profile details,
          such as employment.
      f) Client provides an address that is vague or unusual – 
 
e.g., an
          accommodation agency, a professional registered office or a trading
          address.
      g) Client’s supporting documentation lacks important details such as
            address and phone number.
 
43
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Client is reluctant or vague in relation to identity documents
 (continued):
 
h) There are inordinate delays in client presenting 
 
corporate
 
documents.
 
i) All identification presented is foreign or cannot be checked for
          some reason.
 
j) All identification documents presented appear new or have
          recent issue dates.
 
k) Identification documents are out of date.
 
44
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
(4) 
Transactions and clients outside of Trinidad and Tobago
Client and other parties to the transaction have no apparent ties to
Trinidad and Tobago.
(5) 
Financial Intelligence Unit (FIU)- Registration
Attorneys, vendors and buyers should seek confirmation that attorneys-
at-law, real estate agents and property developers or parties engaged in
the business or selling real estate are registered with the FIU.
 
 
45
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
(6) 
Agreements for Sale
    (a) Buyers should seek independent legal advice
         before
 entering into an agreement to purchase property.
    (b) A standard term in sale agreements should provide for
          deposits to be held by a stakeholder in a trust account.
 
 
46
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
(
7
)
 
E
x
e
c
u
t
i
o
n
 
o
f
 
D
e
e
d
s
Buyers are entitled to require that the execution of the deed of
conveyance, lease or assignment be attested (witnessed) by someone
they appoint at their own cost. This is a useful right to exercise
particularly where the vendor is a stranger. The appointed person can
seek to verify the bona fides of the vendor and his/her attorney.
Attorneys-at-Law should advise their clients  accordingly.
 
47
 
GUIDELINES FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
(
8
)
 
E
x
e
c
u
t
i
o
n
 
A
b
r
o
a
d
 
(a) When deeds conveying property or granting power of attorney
           are executed abroad the oath of the witness proving the same
           must be sworn by him/her in the presence of and certified by
           one of the following officials:
A Trinidad and Tobago diplomatic agent or consular officer; or
A Judge of a Court of record; or,
The Mayor of any City, Town or Borough; or,
A Notary Public
 
48
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
b)
The risk of imposters executing deeds or certifying oaths is higher
when a deed is executed abroad because oftentimes the vendor, the
witness and the ‘official’ will not be known to the buyer. Accordingly,
it is advisable that buyers appoint someone to be present for the
execution of the deed so that the witness can seek to verify the bona
fides of the persons mentioned above.
c)
Where this is not possible the buyer should ask the vendor to give the
name, address, telephone and email address of the witness and the
notary public or other official who would certify the oath of the person
who witnessed the execution of the deed so that the buyer or his
attorney can independently contact them and confirm their identities.
 
 
49
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
d)
In so far as the officials are concerned, the risk is reduced somewhat
where the official is a Trinidad and Tobago diplomatic agent or
consular officer because it would be easy to confirm the existence of
such official and communicate with him/her.
e)
However, in most cases, the official may very likely not know the
vendor or buyer and witness personally and can also be duped.
Further, where the deed itself is not executed before the relevant
official, he or she would not be able to seek any form of identification
of the vendor although, of course, the old problem of falsified
identification documents is still an issue!
f)
The least risky option is for the overseas vendor to come to Trinidad
and Tobago to execute the deed and close the transaction.
 
50
 
GUIDELINES FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
(
9
)
 
T
h
e
 
L
a
w
 
A
s
s
o
c
i
a
t
i
o
n
 
o
f
 
T
r
i
n
i
d
a
d
 
a
n
d
 
T
o
b
a
g
o
 
(
L
A
T
T
)
Attorneys, vendors and buyers should check the Law Association’s
website to verify that the attorneys at law involved in their
transactions are members of the LATT, unless, they are familiar with
the attorneys. If in doubt, ask the attorney at law to produce his/her
current practising certificate and the picture ID issued to Attorneys at
Law by LATT.
 
51
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
(
1
0
)
 
T
h
e
 
L
e
g
a
l
 
P
r
o
f
e
s
s
i
o
n
 
A
c
t
 
C
h
a
p
t
e
r
 
9
0
:
0
3
Section 23 of this Act should be amended to require attorneys at law to
display in a conspicuous place at their offices their practising
certificates or certified copies thereof. An example of a similar
requirement is contained in section 13 of the Registration of Business
Names Act Chapter 82:85.
(
1
1
)
 
 
F
I
U
The FIU should issue certificates annually to all attorneys and real
estate agents who are registered with them and these certificates
should likewise be displayed in a conspicuous place in their offices.
 
52
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Scam Alerts
Attention is drawn to the fact that in England, the Solicitors Regulation
Authority (SRA) issues “scam alerts” identifying persons who falsely
claim to be/impersonate solicitors. These scam alerts can be accessed
in the SRA database. We recommend that a similar practice be adopted
in Trinidad and Tobago.
Prompt Reporting to Police, LATT and F.I.U.;
Instances of fraudulent or questionable real estate transactions should
be promptly reported to the Police, LATT and F.I.U.
 
53
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Title Insurance
The insurance industry should be encouraged to offer title insurance as one of its
products.Lenders should insure for loss due to fraud and the policy should
include the Lender’s attorneys at law as insureds or contain a waiver of
subrogation clause in favour of the Lender’s attorneys.
Division of High Court to deal exclusively with fraud matters
A proposal has been made for establishment of a division of the High Court to
deal exclusively with fraud matters. This would expedite the hearing of land title
fraud cases.
Digitised Driver’s Permits
Drivers permits should be digitised with similar security features as used for
national ID cards i.e. hologram, ghost image, testlin coated paper etc.
 
54
 
RECOMMENDATIONS FOR COMBATTING REAL ESTATE
FRAUD INVOLVING IDENTITY THEFT
 
Link between Land Titles Registries and Department that records births and
deaths
The Registrar General’s Department should create a link between the Land Titles
Registries and the department that records births and deaths so that if a deed
purports to be made by a deceased attorney-at-law or executed by a deceased
vendor, that would be an immediate red flag to withhold registration.
Strengthening of Police Service
The Police Service should be strengthened by the recruitment of additional fraud
investigators and document examiners.
 
 
55
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration
The registration of deeds should be filmed in the way that is done with
the use of ATM machines.
Section 13 (a) of the Registration of Deeds Act Chapter 19:06 (RDA)
should be amended to provide that the cover sheet accompanying every
deed presented for registration must include the law term for which and
date of issue of the practising certificate of the attorney at law who
prepared the deed and any other attorney at law who took execution of
the deed. A similar provision should apply to instruments under the
RPA.
 
56
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
Sections 5 and/or 7 of the RDA should be amended to specify that deeds
should only be accepted for registration by the Registrar General if
prepared by attorneys at law holding valid practising certificates at the time
of preparation.
The RDA should be amended to empower the Registrar General to suspend
the registration of a deed where:
 
(a) he/she has reasonable grounds to believe that it has been fraudulently
          or wrongfully obtained; or,
 
(b) he/she considers that it is in the public interest to do so.
A similar provision should be included in the RDA.
 
57
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
This power should be exercised after an aggrieved party submits sworn evidence
that is deemed credible by the Registrar General that the deed in question is
fraudulent. Where the Registrar General excises the power to suspend, the party
against whom the allegation of fraud is made and all other interested parties
should be promptly notified. Upon service of such a notice, the Registrar
General or any interested party shall be entitled to apply to the Court for a
determination as to whether the deed should be accepted for registration or
remain on the Register or expunged from the Register. Where the Court orders
cancellation of a deed or that it be expunged from the Register all rights and
interests created by the deed and any subsequent dealing with respect to the
property shall be of no effect and null and void.
 
58
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
The amendment should provide for compensation to any legitimate owner
who suffers loss as a consequence of impropriety or negligence by the
Registrar General in exercising the power to suspend registration. There
are precedents for giving the Registrar General similar powers. See for
example section 138 of the Real Property Act Chapter 56:02 (RPA). See
also Ontario [Canada] Ministry of Government Services Consumer
Protection and Service Modernization Act, 2006, the Ontario Land Titles
Act and the Burden Reduction Act, 2016.
 
59
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
Further, as proposed by the Registrar General at a seminar in 2016, the
Registrar General should be permitted to issue and utilise Personal
Identification Numbers (PIN) in the registration of deeds process as follows:
(a) Each attorney at law would be assigned a PIN and will also be able to
assign PINS to his/her clerk;
(b) The attorney at law will be able to change his and his clerk’s PIN at any
time;
(c) The attorney at law’s PIN number will be used by the Registrar General
to communicate confidentially with the attorney at law;
 
60
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
(d) Immediately after a deed is submitted for registration the Registrar
General would send a confidential email to the attorney at law who
purportedly prepared the deed advising that the deed has been accepted for
registration. The attorney will then have a specific time (say 24 hours?) to
respond confirming or denying the authenticity of the deed. If he/she denies
the authenticity the Registrar General will suspend the registration of the
deed and notify all parties who wish to challenge his/her decision whereupon
a similar procedure as set out in sub-paragraph 2 (iii) shall apply. If there is
no response within the specified time the Registrar General will place the
deed in the Register.
 
 
61
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
The RDA and the RPA should be amended to give each property owner
the option to serve a notice on the Registrar General of his/her usual
address (and an address for service if different from their usual
address), telephone number and email address (and any changes
thereto) and to require that these notices be placed in a special index in
the Register so that interested parties may link the property owner’s
title deed to his/her current address and contact information.
 
 
62
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
Add sections to the RDA and RPA to authorise the Registrar General to
have real time access to the records of the Registry of Births and Deaths
in order to verify whether there is any record of the death of an attorney at
law (who allegedly prepared a deed) at the date of the purported
preparation of the deed by him/her and also the dates of execution by the
relevant parties to the deed. As in the case described at sub-paragraph 2
(iii) above, the Registrar General should have the power to suspend the
registration of a deed in these instances whereupon a similar procedure as
set out in sub-paragraph 2 (iii) shall apply.
 
 
63
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Registration (continued)
Here, note should be taken of the fact that the fraud in the 
Purrunsing
transaction was uncovered when an attempt was made to register the
fraudulent deed. The Land Registry made contact with the true owner
of the property and this is what led to the discovery of the fraud. An
advantage of this suggestion is that attorneys acting for vendors and
buyers who are engaged in customer due diligence could independently
contact the person purportedly selling the property to verify that he is
in fact the true owner.
 
 
64
 
RECOMMENDATIONS FOR COMBATTING REAL
ESTATE FRAUD INVOLVING IDENTITY THEFT
 
Authority to Register
Attorneys at law and firms who have authorised persons to register
deeds on their behalf should issue a letter to the Registrar General
giving the names, addresses and identification particulars
of these persons and the Registry should only accept deeds for
registration from these persons on behalf of their principals.
Meeting with AG AND Ministry of Legal Affairs
It is proposed that the President and members of the LATT as well as
representatives of other stakeholder groups meet with the Attorney
General and the Minister of Legal Affairs in order to advocate for the
legislative and administrative reforms mentioned above.
 
65
 
LESSONS
 
How can attorneys and real estate agents mitigate against
liabilities:
1.
Consider avoiding acting as trustees;
2.
Seek to have clients verify the identity of the vendor;
3.
Develop a robust Anti Money Laundering regime and apply it to
verify the identity of clients;
4.
Avoid acting for both vendor and buyer in transactions unless
they know both parties and other aspects of ‘conflict of interest
are observed.
 
66
 
END
 
Material used for this paper was taken from case law, Lexis Nexis Online, the
Law Society Gazette, the Financial Intelligence Unit and online publications
from a leading UK law firm, Walker Morris LLP
.
 
67
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Delve into the complexities of fraud in real estate transactions, particularly those involving identity theft. Explore various types of fraud, responsibilities, and liabilities of attorneys, as well as landmark legal cases that shed light on breach of contract and negligence in conveyancing. Learn about the crucial role attorneys play in safeguarding clients against risks and ensuring ethical practices in real estate dealings.


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  1. LAW ASSOCIATION SEMINAR Fraud in Real Estate Transactions Involving Identity Theft Presented by Ashmead Ali 19thJanuary, 2018 1

  2. INTRODUCTION 2

  3. INTRODUCTION Some types of fraud that can occur in real estate transactions: Stamp Duty Fraud- where the State is cheated of Stamp Duty through the understatement of the full consideration paid for real estate. Fraudulent Misrepresentation- i.e. cases where: A vendor shows a particular property to a buyer but by the actual agreement for sale and conveyance he sells and conveys another property which he owns; A vendor who intends to acquire a property enters into an agreement to sell this property before he acquires the title but does not disclose this to the purchaser; A vendor impersonates the true owner of a property (Fraud Involving Identity Theft) N.B. When someone purchases property from a fraudster , invariably the purchaser and/or his mortgagee bears the loss. 3

  4. OUTLINE Responsibilities and Liabilities of Attorneys acting for Vendors and/or Buyers in: Breach of Contract/Negligence- Where there has been a breach of contract or duty of care by an attorney; Breach of Trust- When attorneys hold purchase moneys in a conveyancing transaction, they may be deemed to do so as trustees and will have the fiduciary obligations imposed on trustees. 4

  5. OUTLINE Purrunsing v A'Court & Co (A Firm) [2016] EWHC 789 (Ch) (Purrunsing ); P & P Property Ltd v Owen White & Catlin LLP and another [2016] EWHC 2276 (Ch) ( P&P ); Dreamvar (UK) Limited v Mishcon De Reya (a firm) and Mary Monson Solicitors Limited [2016] EWHC 3316 (Ch) ( Dreamvar ). 5

  6. Breach of Contract/Negligence The fundamental nature of the duty of a solicitor is the duty to exercise reasonable care and skill in the course of professional activity, whatever other obligations he may have. The standard has been described as that of an ordinarily competent solicitor. He owes a duty to his client both in contract and in tort, and he may be liable to a third person for the tort of negligence. - (CORDERY on Solicitors Issue 39, 9th Edition pg. I/301-I/303). 6

  7. Breach of Contract/Negligence A solicitor has a duty of care to inform of any potential risk to his client that he is aware of, even where he has not been expressly instructed in relation to the risk (Credit Lyoynnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch)). 7

  8. Breach of Contract/Negligence In normal conveyancing transactions attorneys who are acting for a seller do not in general owe to the would-be buyer a duty of care when answering inquiries before contract or the like. (Gran Gelato v Richcliff [1992] Ch 560). 8

  9. Breach of Contract/Negligence Special Cases where where this general rule does not apply and a duty of care will be owed by the solicitors to the buyer: Where the solicitors stepped outside their role as solicitors for their client and accepted a direct responsibility to the lender. (Gran Gelato v Richcliff [1992] Ch 560); A vendor s attorney will be held to owe a duty of care to the purchaser where there are special circumstances which result in him accepting a direct responsibility to the purchaser to take reasonable care to ascertain the identity of the vendor or to ensure that he is the true owner of the property being sold; 9

  10. Breach of Contract/Negligence In Purrunsing the Court held that the buyer s solicitor was liable to the buyer for breach of contract and negligence because he failed to advise his client, the buyer, that he had information that posed a risk to the client. 10

  11. Breach of Contract/Negligence The buyer s solicitors asked the seller s solicitors to confirm they were familiar with the sellers and would verify that they are the sellers and check ID to support same. The seller s solicitors responded in the following terms: As explained to you over the telephone, prior to being approached to act on the sale we have no personal knowledge of Mr Dawson, but we confirm that we have met him in person and have seen his passport (and retain a copy of the photo page) together with utility bills etc. showing his UK address as notified to us. The court held that the buyer s solicitor ought to have known that the answers were unsatisfactory, and ought to have told the purchaser of the unsatisfactory responses received and advised the purchaser not to proceed with the transaction until satisfactory responses had been received. 11

  12. Trust When an attorney at law engaged in real estate transactions holds money for a purchaser of property, he is regarded as a trustee and as such will have the fiduciary obligations associated with a trustee.(Purrunsing); If he pays out the purchase money to a fraudster who is impersonating the true owner of the property this would amount to a breach of trust and he may be liable for the loss suffered by the purchaser; The attorney would not necessarily be liable to his client (the purchaser) because the Trustee Ordinance Ch. 8 No.3 at section 62 gives the court a discretion to grant the attorney relief where he has acted honestly and reasonably and ought fairly to be excused for the breach of trust. (same as s.61 of the English Trustee Act) 12

  13. Trust As stated by the judge in Purrunsing at paragraph 38(i): The reasonableness test that is applied to a solicitor who parts with completion monies without obtaining completion is necessarily a high one because of the need to interpret s.61 consistently with equity s high expectation of a trustee discharging fiduciary obligations It is therefore one which requires the solicitor concerned to have acted with exemplary professional care and efficiency and to be careful, conscientious and thorough though the test remains one of reasonableness not perfection 13

  14. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): In Purrunsing the seller s solicitor was unaware that the seller was not in fact the true owner of a property and purchase monies were transferred. Both sets of solicitors in the transaction were found to be in breach of trust: the duty not to release purchase monies before legal completion is an absolute one, and as the relevant property transfer deed was forged, legal completion had not in fact taken place 14

  15. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): Both firms sought relief under section 61 of the Trustee Act 1925 [s.62 of T&T s Trustees Ordinance], a statutory provision that allows a court to relieve a trustee from liability where they have acted honestly and reasonably and ought fairly to be excused for the breach of trust . His Honour Judge Pelling refused to grant relief. The supposed seller of the property had provided an address different to that of the property and to that of the alternative service address as stated on the Land Registry register, and the seller s solicitor had made no proper attempt to 15

  16. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): carry out risk-based due diligence and comply with anti-money laundering regulations . Importantly, no documentation was obtained linking the seller to the property. Similarly, the buyer s solicitor should have been more alert and not satisfied with the answer they received on whether the seller was entitled to sell the property, and they should have communicated this concern to their client. Both sets of solicitors were found to bear equal responsibility for the loss suffered by the buyer. 16

  17. Duties of Attorneys acting for Vendors and Purchasers: In Purrunsing and other recent English cases on real estate fraud involving identity theft, the Courts have looked to the observance by solicitors of the English Proceeds of Crime Act and associated anti-money laundering regulations (which are designed to combat money laundering and terrorism financing) as a key factor in determining whether solicitors have acted reasonably, and, as a consequence, ought possibly to be excused for their breach of trust. Attorneys in Trinidad and Tobago are required to observe similar standards under our Proceeds of Crime Act Chapter 11:27 (POCA) and Anti Money Laundering guidelines issued by the Financial Intelligence Unit. As noted in Purrunsing, the Court held that the solicitors did not act reasonably because they failed to adopt a risk based approach to client due diligence as required by their POCA. 17

  18. Duties of Attorneys acting for Vendors and Purchasers: The court found that if the solicitors had adopted a risk based approach several red flags based on the facts of the case would have alerted them to the possibility of fraud. These were: the property was vacant; the property was not charged (mortgaged); the property was of a reasonably high value; the purported seller was based abroad; the purported seller was pressing for an unusually quick completion; 18

  19. Duties of Attorneys acting for Vendors and Purchasers: no instructions were sought by the seller s solicitor as to why his residential address supplied was not the same address as the sale property; no documentation was asked for or supplied showing the link between the fraudster and the property including utility bills. the purported seller failed to provide any documentation actually linking him to the property; the purported seller denied that any building work had been carried out at the property during his period of ownership, and this was inconsistent with the Local Search result; and the purported seller had aborted an earlier potential sale when he had been pressed for information about his employer. 19

  20. Duties of Attorneys acting for Vendors and Purchasers: There was no allegation or evidence of dishonesty by the solicitors. However, the fact that the seller s solicitor failed to carry out money laundering/identity checks in accordance with reasonable practice; and the fact that the buyer s solicitor failed to report gaps and discrepancies in the information provided by and about the purported seller and about the property*, meant that neither solicitor had acted reasonably. *i.e. the buyer s solicitor was found to be in breach of contract and negligent [see slides 10 and 11] 20

  21. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): The decision in Purrunsing contrasted with that of P&P later the same year, with the purchaser (P&P) failing in its claim against the fraudulent seller s solicitor, as well as the estate agent. Similar to Purrunsing, P&P involved a vacant property, which a fraudulent seller claimed he owned. When the true owner discovered what had happened, P&P brought a claim against Owen White & Catlin (OWC) 21

  22. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): as well as the estate agent... Robin Dicker QC, sitting as a deputy High Court judge, ruled that the solicitor checks were designed to reduce the risk of fraud, but could not eliminate it The court in P&P distinguished Purrunsing on the basis that different versions of the Law Society s Code for Completion by post were used in the two cases: in Purrunsing, the 1998 version was used, which requires the funds being held on trust until satisfactory completion, whereas in P&P, the less stringent 22

  23. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): 2011 version was used, which contains wording to the effect that if completion takes place straight away, then the completion monies are not held on trust by the seller s solicitor. While the decision in P&P was welcomed by conveyancing solicitors for its pragmatic stance, their relief proved short-lived: not only has leave to appeal been granted, but a few months later, came a decision which has seemingly placed greater responsibility on a buyer s solicitor to verify the seller s identity 23

  24. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): The decision in Dreamvar involved a successful claim against City firm Mishcon de Reya by a client purchaser. Dreamvar based its claim against Mishcon on negligence for failing to seek an undertaking from the seller s solicitor that it had taken reasonable steps to establish the client s identity, as well as failing to identify features of the transaction which suggested an increased risk of fraud. The second part of the claim was based on breach of trust 24

  25. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): Separately, the purchaser also brought a claim against Mary Monson, the seller s solicitor, for negligence, breach of warranty of authority and breach of an undertaking that it had authority from the real owner of the property. The court dismissed all allegations of negligence against Mishcon. In particular, it rejected the argument for an undertaking, holding that this was contrary to standard practice in the profession. However, Deputy High Court Judge, David Railton QC, did allow the claim for breach of trust against Mishcon, holding that it was an implied term of the 25

  26. Duties of Attorneys acting for Vendors and Purchasers: M. Shahid FightingWords Law Society Gazette (9th June, 2017): retainer that it would only release purchase monies on completion of a genuinepurchase . Furthermore, it was not entitled to relief from breach under section 61 of the Trustees Act. 26

  27. Duties of Attorneys acting for Vendors and Purchasers: In Dreamvar, the judge stated as follows: the effect of the breach of trust on the buyer had been disastrous. It lost the purchase price, and in return received nothing. It did not have insurance, or any ability (or knowledge) to enable it to self-insure against the risk of fraud, of which Mr Vardar (the buyer s sole shareholder and director) was unaware; Mischon was insured for events such as the one in this matter and its insurance cover was sufficient to cover in full the loss suffered; 27

  28. Duties of Attorneys acting for Vendors and Purchasers: In terms of balancing the relative effects or consequences of the breach of trust, it was apparent that Mischon (with or without insurance) was far better able to meet or absorb the loss than the buyer; Although it was not unreasonable for Mischon not to have advised the buyer about the risk of fraud, or to have sought greater protection for the buyer against that risk (such as further undertakings), it was also not irrelevant that Mischon was necessarily far better placed to consider, and as far as possible achieve (a matter not in the event tested), greater protection for the buyer against the risk which in fact occurred; 28

  29. Duties of Attorneys acting for Vendors and Purchasers: The buyer had no recourse against the seller s solicitor, and (it appeared) no practical likelihood of either tracing or making any recovery from the fraudster. As a result, the only practical remedy it had was against Mischon. In the case against the seller s solicitor, the court held that the seller s solicitors (MMS) also held the completion moneys on trust for the buyer but was permitted to release the moneys to its client for the purpose of completion even though there was no actual completion of a genuine purchase. As such, the court found that the seller s solicitors were not in breach of trust. This case has been widely criticised. Although the Court did not find fault with Mishcon s conduct, it still used its discretion to hold them liable. The Law Society is considering intervening in the appeal. 29

  30. Local Practice: Trust Common in England that the purchase money in property sales are paid to the buyer s solicitors who would hold the funds in their clients account and at completion pay them to the vendor s solicitors who would then hold the funds in their clients account before disbursing to the vendor. In both cases therefore, the solicitors were clearly trustees. Trinidad and Tobago- the current practice is different so that (with few exceptions*, the purchase money (or loan money) is not held by either the buyer s attorneys or the vendor s attorneys but rather paid by the buyer or his lender directly to the vendor (or his mortgagee where appropriate) attorneys would not usually be trustees. Question: Would this result in the vendor s attorney and the purchaser s attorney being considered as trustees? 30

  31. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT 31

  32. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT 1.Property Owners Persons who own real estate, especially vacant land should visit their properties regularly to see if there are unauthorised persons in occupation. 2. Pre-Sale Signs Real estate agents should place a sign on the property stating For Sale and give their contact information on properties being sold. 32

  33. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT 3. Visits Real estate agents, purchasers, and valuation surveyors should visit the property being sold and where possible speak to neighbours who can give information on the identity of vendor. Mortgagees should also have their site inspectors do so. 4. After Sale Signs Immediately upon the execution of the agreement for sale of property the real estate agent or the purchaser should place a sign on the property stating that the property has been sold and giving his/her contact information. 33

  34. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT 5. Anti-Money Laundering Guidelines As noted, attorneys engaged in real estate transactions are urged to observe the Anti-Money Laundering Guidelines of the Trinidad and Tobago Financial Intelligence Unit (FIU) and adopt a risk based customer due diligence. 34

  35. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT 6. Identification (continued) Due Diligence (English Money Laundering Regulations): Reg 5(a) identifying the customer and verifying the customer s identity on the basis of documents, data or information obtained from a reliable and independent source and by Reg 5(c) as obtaining information on the purpose and intended nature of the business relationship. Repeated: paragraphs 3.1 and 3.3 of the Financial Intelligence Unit s Customer Due Diligence Guide No. 1 of 2011 and they are based on the Trinidad and Tobago POCA and Financial Obligations Regulations 2010. 35

  36. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Identification (continued) Buyers and their attorneys should verify the bona fides of vendors (and real estate agents) who offer to sell them real estate. Unless they know a vendor and real estate agent personally they should ask them to produce two forms of government issued picture IDs, one of which should be a National ID Card or Passport. Identification documents should be checked for their date of issue which should not be a weekend day or public holiday. 36

  37. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Identification (continued) In the case of vendors who are companies, buyers should have a search done of the company at the Companies Registry and ask for one or more directors to provide similar government issued IDs. Established corporate property developers and public companies may be excepted. 7. Bank Reference Letters It is also recommended that vendors should be asked to produce bank reference letters certifying that they are known to the bank. 8. Swearing of Affidavits in presence of Commissioner Attorneys and Commissioners of Affidavit should ensure that the witness proving execution of the deeds by the vendor swears the affidavit in the presence of the Commissioner and provide similar forms of ID (Section 11 of the Registration of Deeds Act Ch.19:06). 37

  38. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT 9. Google Name of Vendor It is also good practice to Google the names of vendors. This can sometimes turn up information useful in identifying vendors and their history . 38

  39. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Trinidad and Tobago Anti-Money Laundering and Counter Financial Terrorism Guidelines Red Flags: (1) Excessively obstructive or secretive client a) Client appears to have dealings with several Attorneys-at-Law for no apparent reason. b) Client is accompanied and watched. c) Client presents confusing and inconsistent details about the transaction. d) Client over-justifies or explains the transaction. e) Client is secretive and reluctant to meet. f) Client is nervous, not in keeping with the transaction. 39

  40. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Excessively obstructive or secretive client (continued) g) Client s mobile, home or business telephone number has been disconnected or there is no such number when an attempt is made to contact client. h) Client insists that a transaction be done inordinately quickly. i) Client uses aliases and a variety of similar but different addresses. 40

  41. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Excessively obstructive or secretive client (continued) j) Client does not want correspondence sent to home address and uses a Post Office Box or General Delivery address, instead of a street address when this is not the norm for that area/type of business. k) Client offers you money, gratuities or unusual favours for the provision of services. l) Transaction seems to be inconsistent with the client s apparent financial standing or usual pattern of activities. 41

  42. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT (2) Transactions involve unusual levels of funds or cash Client seeks to conduct large transactions with cash. (3) Client is reluctant or vague in relation to identity documents a) Client produces seemingly false identification or identification that appears to be counterfeited, altered or inaccurate. b) Client refuses to produce personal identification documents or only submits copies of personal identification documents. c) Client wants to establish identity using something other than his or her personal identification documents. 42

  43. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Client is reluctant or vague in relation to identity documents (continued): d) Client refuses or appears particularly reluctant, or delays to provide the information requested without reasonable explanation. e) Client s area of residence is not consistent with other profile details, such as employment. f) Client provides an address that is vague or unusual e.g., an accommodation agency, a professional registered office or a trading address. g) Client s supporting documentation lacks important details such as 43 address and phone number.

  44. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Client is reluctant or vague in relation to identity documents (continued): h) There are inordinate delays in client presenting corporate documents. i) All identification presented is foreign or cannot be checked for some reason. j) All identification documents presented appear new or have recent issue dates. k) Identification documents are out of date. 44

  45. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT (4) Transactions and clients outside of Trinidad and Tobago Client and other parties to the transaction have no apparent ties to Trinidad and Tobago. (5) Financial Intelligence Unit (FIU)- Registration Attorneys, vendors and buyers should seek confirmation that attorneys- at-law, real estate agents and property developers or parties engaged in the business or selling real estate are registered with the FIU. 45

  46. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT (6) Agreements for Sale (a) Buyers should seek independent legal advice before entering into an agreement to purchase property. (b) A standard term in sale agreements should provide for deposits to be held by a stakeholder in a trust account. 46

  47. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT (7) Execution of Deeds Buyers are entitled to require that the execution of the deed of conveyance, lease or assignment be attested (witnessed) by someone they appoint at their own cost. This is a useful right to exercise particularly where the vendor is a stranger. The appointed person can seek to verify the bona fides of the vendor and his/her attorney. Attorneys-at-Law should advise their clients accordingly. 47

  48. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT (8) Execution Abroad (a) When deeds conveying property or granting power of attorney are executed abroad the oath of the witness proving the same must be sworn by him/her in the presence of and certified by one of the following officials: A Trinidad and Tobago diplomatic agent or consular officer; or A Judge of a Court of record; or, The Mayor of any City, Town or Borough; or, A Notary Public 48

  49. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT b) The risk of imposters executing deeds or certifying oaths is higher when a deed is executed abroad because oftentimes the vendor, the witness and the official will not be known to the buyer. Accordingly, it is advisable that buyers appoint someone to be present for the execution of the deed so that the witness can seek to verify the bona fides of the persons mentioned above. c) Where this is not possible the buyer should ask the vendor to give the name, address, telephone and email address of the witness and the notary public or other official who would certify the oath of the person who witnessed the execution of the deed so that the buyer or his attorney can independently contact them and confirm their identities. 49

  50. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT d) In so far as the officials are concerned, the risk is reduced somewhat where the official is a Trinidad and Tobago diplomatic agent or consular officer because it would be easy to confirm the existence of such official and communicate with him/her. e) However, in most cases, the official may very likely not know the vendor or buyer and witness personally and can also be duped. Further, where the deed itself is not executed before the relevant official, he or she would not be able to seek any form of identification of the vendor although, of course, the old problem of falsified identification documents is still an issue! f) The least risky option is for the overseas vendor to come to Trinidad and Tobago to execute the deed and close the transaction. 50

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