Property fraud: a cautionary tale, Hollywood style
Mar 24th, 2015 | By John Tracy
For ages our society has loved to paint landlords as somewhat evil — individuals that use and abuse their power and position over their helpless tenants.
But recall the 1990 thriller, Pacific Heights, staring a young, fresh Melanie Griffith and a handsome Matthew Modine as a couple terrorized by a conniving and twisted renter, Carter Hayes, played so convincingly by Michael Keaton. Carter never pays any rent, drives the other tenants away (by breeding cockroaches, no less!) and systematically ruins the lives of his landlords, as well as racking up their credit card bills.
Although fictional, Pacific Heights offers a cautionary — albeit over-the-top — tale illustrating the perils of property fraud.
In an economy where the average home price in Toronto exceeds the one million dollar mark, it is increasingly common for real-life homeowners to use income from tenants to pay down their mortgages or earn additional income. It can also prove fertile ground for fraudsters.
Just ask Calgary landlord Rod Faulkner:
“In the 12 years, people have scammed me in just about every way imaginable,” says Faulkner, who owns 12 Calgary revenue properties. “And every time I get scammed, it costs me money, and I learn a new lesson.”
In the 2012 online article entitled Avoiding property fraud 101, writer Peter Mitham paints a grim picture:
Regulators in each province track mortgage-and title-related fraud, and Better Business Bureaus track other types, but mortgage-related fraud alone regularly tops $300 million a year in Canada. When frauds of all types relating to real estate are factored in, the tally is easily more than $500 million annually.
No one wants a tenant from hell like Carter Hayes in Pacific Heights. If you’re looking for a Hollywood ending to your rental story, below are some practical ways to protect yourself and your investment when renting:
Consider redirecting your mail
If possible, do not have tax bills, credit card bills, bank statements or any other financial information sent directly to your home. Instead, consider getting a P.O. Box, or having the documents sent electronically to a private, secure email address or access documents directly through your financial institution’s portal.
Remove or secure all financial information on the premises
If you are sharing accommodation with a renter, remove old income tax files, property tax records and other bills from the premises. A locked cabinet drawer will not deter a savvy fraudster. Keep the documents in a secure off-site location.
Do ALL security checks
Police criminal record checks and credit checks are worth the nominal fees for the information you gain. Call all references provided, but take their recommendation with a grain of salt: they may be in on any potential scam. Another great way to learn more about your prospective renter is to search their online profile. You’d be amazed at what you can find with a simple Google search! And above all, trust your instincts.
Know your neighbours
Take the time to introduce yourself to your neighbours who can be your eyes and ears when you’re not around.
Get title insurance
Remember fraudsters are getting more and more savvy all the time and although there is no such thing as a 100% guarantee against fraud, title insurance can help greatly mitigate your overall risk. You can learn more about the benefits of title insurance online at FCT.ca.
A recent Toronto Star article, How Ontario landlords can avoid bad tenants outlines additional tips that you may also find interesting.
Know any good landlord or tenant horror stories? Share them here.