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FRAUD ALERT: Phony buyers in real estate transactions

An alert recently posted by the Law Society of New Brunswick involved a member from the Moncton area being presented with a forged bank letter from a client. According to the post:

"In this scenario, the lawyer had a first contact over the telephone with a prospective client purchasing residential property in the area. The lawyer gave information as to the fees to be expected and asking the male individual to come by the lawyer’s office and to bring his identification papers needed for opening the file and for doing the purchase transaction. The prospective client never called again and never dropped off the requested documents. The lawyer was subsequently informed by the real estate agent that the deposit cheque was returned with insufficient funds. The real estate agent wasn’t able to contact the purchaser. The lawyer was unsuccessful in getting a hold of the prospective client also. However, the lawyer received a letter from a known financial institution informing him that there were funds available for the purchase transaction. This seemed odd to the lawyer, so he contacted the bank. It is then that the lawyer learned that the bank never issued such a letter."

In order to avoid fraud in real estate transactions, it is prudent to confirm the legitimacy of the letter with the financial institution that had prepared the letter.

Before you open a new client file, be vigilant with every request for services that you receive. Fraudulent requests for services can be made by email, paper mail and courier, as well as individuals who arrive in person to retain you and use your trust account to receive and disburse funds. Be cautious with all cheques received, especially if they exceed an agreed upon amount. When in doubt, contact LIANS for more information on current reported scams and how to avoid them. Remember that you must always confirm a prospective client’s identification in accordance with the Client ID Regulations of the Nova Scotia Barristers’ Society.

If you decide to proceed with a transaction, be sure to go to the bank website to verify branch transit number, address and phone number on the cheque. Wait until the bank confirms that the funds are legitimate and are safe to withdraw from the deposit. Where possible, use the Large Value Transfer System (LVTS), an electronic funds transfer system that allows large payments to be exchanged securely and immediately.

To report or seek advice on dealing with fraud and scam attempts, contact Cynthia Nield at cnield@lians.ca or 902 423 1300, x346.