Tag: real estate fraud
To assist real estate lawyers in identifying forged powers of attorney and fraudulent real estate transactions, the Law Society of Upper Canada has provided real estate lawyers with a set of new guidelines and procedures for powers of attorney and real estate transactions.
In order to address the issue of fraudulent transfers of title and mortgages, new registration requirements were implemented last year necessitating law statements by individuals registering real estate documents under the authority of a power of attorney. Paul Trudelle’s previous blog of last year describes the new registration requirements.
The new registration requirement and Law Society guidelines have in part been necessitated by the case of Revickzy v Melekinia. Natalia Angelini’s blog sets out the background of the case and comments on the possible impact on a solicitor’s duties.
The Law Society guidelines include the following suggestions:
- To the extent possible, lawyers avoid the use of Powers of Attorneys in real estate transactions;
- That when a Power of Attorney is required and a pre-existing Power of Attorney does not exist, the lawyer should prepare the Power of Attorney themselves, meet with the donor and make diligent inquiries to establish that the donor’s identity;
- That lawyers for all parties should review Power of Attorney to determine that it is in compliance with legislation;
- That lawyers should use their best efforts to register the Power of Attorney on title and provide a copy of the registered Power of Attorney to the other side; and
- Lawyers comply with the Law Society client identification and verification requirements.
Hopefully, in adopting these practices lawyers can assist in recognizing fraudulent real estate transactions.
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Often in the context of estate matters issues arise around real estate because it is often one of the largest assets comprising an estate. A recent decision in British Columbia is a case in point.
Last week the BC Court of Appeal overturned a lower Court decision that found a defrauded financial institution was to be reimbursed by the unsuspecting widow whose home had been fraudulently mortgaged.
A direct link to the BC Court of Appeal decision is helpful. The citation is Re Oehlerking Estate, 2009 BCCA 138.
This case is especially relevant to estate law in that the widow attempted to transfer the property, held in the name of her deceased husband, to her own name in 2006 and only then realized a fraud had occurred whereby a mortgage had been taken out on the property after it was transferred to someone else. The lower Court decided the property should be returned to the widow but she was liable for the mortgage. The Court of Appeal did not agree.
There are significant issues at stake, not least of which is the increased risk to financial institutions which may lead to an appeal to the Supreme Court. Similar cases have occurred in Ontario.
A web search on real estate fraud led me to a Criminal Intelligence Service Canada assessment of mortgage fraud, prepared in 2007. Further, the Ontario government provides tips on its website to protect against real estate fraud.
Estate Trustees ought to be vigilant regarding mortgage and real estate fraud especially because identity theft often occurs after a recent death.
Thank you for reading.