When the housing market crashed in 2008, real estate fraud became a hot button issue with many assigning blame for the economic crash on fragile mortgage deals that forced the housing bubble to burst.
For real estate agents or brokers, today’s real estate outlook is improving, but there is still the opportunity to unintentionally commit fraud while closing a real estate deal due to complicated laws that often side with buyers.
Some potential real estate or broker fraud cases that could result in charges include:
- Breach of duty claims that arise due to fiduciary duty, which requires a real estate agent to act in his or her clients’ best interests, even if that means negotiating a lower fee than expected.
- Knowingly failing to reveal that the square footage of the home being sold is not the same as what was stated on the listing;
- Failing to reveal an interior wall leak, which could result in mold problems.
- Failure to disclose that mold exists on the property.
- Failure to reveal cracks in a home’s foundation that have been hidden or patched.
- Failure to reveal that the property purchased by the buyer is subject to environmental regulations, rezoning, or other laws that could prevent the buyer from using the real estate as intended.
- Assisting a buyer in misrepresenting his or her credit reports, salary, or employment history in order to qualify for a home loan.
- Mortgage fraud, which according to the U.S. Internal Revenue Service is the preparation of two separate sets of mortgage documents – one for the seller, reflecting the accurate price of the property, and one for the lender, with an elevated selling price. After the funds are provided, the extra is divided between the co-conspirators, usually the real estate agent who prepared the paperwork and the buyer who receives the funds.
- Constructive fraud, which happens when a real estate agent gains an unfair financial advantage using deceitful methods, with or without intent.
- Foreclosure rescue scams are common examples of real estate fraud, and they were rampant after the housing crash. Homeowners desperate to save their home became victims of scams including:
- Title fraud, when investors offer a “temporary title transfer,” claiming the owner can lease the home with the intent of buying it back at a later date, only to find that the home’s been sold and the homeowner is still sitting on the original mortgage;
- Equity stripping, which involves the homeowner giving up ownership of the house but continuing to pay rent that they believe is going toward the mortgage, but is instead being pocketed by the investors;
- Renegotiating scams,
during which the homeowner believes a company is negotiating on their behalf, but is in fact negotiating with the lender to buy the home at a lower price.
Because the consequences of real estate fraud can be costly, it’s important to go over paperwork in order to protect your interests. If convicted, a defendant could be forced to pay damages related to the fraud, including lost property value, pain and suffering, medical expenses related to exposure of unreported mold, closing costs, and lost profits.
There is also the risk of federal prison time due to zealous attorneys who are aggressively prosecuting suspected mortgage and real estate fraud cases to prevent another financial crisis.
Contact a Florida Real Estate Fraud Attorney
Preventing real estate fraud is vital in today’s new housing climate, but having an experienced attorney as part of the sales process can prevent a costly mistake. If you do face charges, a Florida real estate fraud attorney can help you defend yourself against fraud claims. Call Ricardo Rodriguez at Rodriguez Law at
(305) 262-8226.
