(NC)-A friend of a friend has a fantastic real estate "investment" opportunity for you: No need to put up any money, simply hold properties for a short time before they are flipped - and you and your new "friend" split the profits.
"This may be a fraudulent scheme and the mortgage lender could soon be looking for your mortgage payments," says Kathleen Waters, a specialist in real estate law and vice president of TitlePLUS title insurance. "Even worse, the police may be looking to charge you with a serious criminal offence."
The Tenant Flip Fraud
Your prospective tenant wants to rent your property for a child studying in Canada. But because he lives oversees, he's willing to pay the rent for a full year in advance and in cash. no need to worry about references since the rent is fully paid for a year.
To your surprise, your tenant fraudulently transfers the property to himself, then sells it to a very nice family who of course does not know you and will not leave simply because you say you own the property.
How this gets resolved depends on many things including whether or not you have title insurance and whether your province's land registration system has a compensation plan to deal with these types of issues. Resolving the problem might only cost you time and inconvenience - but it could also cost you tens of thousands of dollars to fix the problem.
The Middleman Value Fraud
That friend of a friend asks to use your name to buy and mortgage a property that's "a deal" at $250,000 and can be easily resold for more - with you and your friend sharing in the profit. The fraudster promptly disappears with over $200,000 in mortgage funds, you discover the property is only worth $150,000 -and you're stuck with the overpriced property and a very large mortgage.
If the real estate "deal" sounds too good to be true, check with your lawyer. Lawyers know what to look for and can help you avoid being duped by a fraudster.
A useful resource is the TitlePLUS Real Simple Real Estate Guide, a website that provides information on what lawyers do and how to avoid fraud, as well as mortgage calculators, a locate-a-lawyer feature and other tools. It is available for free at www.titleplus.ca.