The recent case of a man losing his house as a result of a Nigerian real estate scam highlights the need for increased vigilance by everyone involved in real estate transactions.
Although it’s the first time such a crime has been committed in Australia, it’s by no means the first fraud involving a forged property title.
Understandably the Nigerian house sale scam created a lot of press headlines but instances of mortgage fraud are far more commonplace and often create as much or more financial hardship.
In a paper (PDF download will start immediately) delivered to the Australian Institute of Conveyancers in 2007, Paul Watkins, General Counsel at Stewart Title, warned that mortgage fraud accounts for 21 percent of all serious fraud offences in Australia and New Zealand.
Examples are easy to find.
In one instance fraudsters used forged title documents to “steal” the 13-storey Australian Rugby House and bankroll the purchase 605 kilograms of gold bullion. Only quick thinking by staff at the Perth Mint foiled the crime, but not before the mortgagor – in this case the Uniting Church (NSW) Trust Association – paid out a cheque of $14.4 million to pay for the gold.
In another (PDF download will start immediately), reported by the Department of Lands in NSW, criminals used forged title documents and fake identities to secure mortgages over land they didn’t own. Their scam conned mortgage brokers and lawyers alike.
These cases, along with many others like them, show the need for both real estate and settlement agents to correctly identify their client. As the conveyancing industry moves toward a national electronic conveyancing system (NECS) it appears likely that agents will be required to identify their clients using a system similar to the 100 point system employed in financial transactions.
However agents shouldn’t wait for legislation to take affect before implementing commonsense risk management procedures.