Real Estate Fraud

A real estate job can be pretty lucrative and enable you to secure your financial future. However, you should exercise caution when dealing with real estate transactions. There are several ways in which real estate fraud could occur. This means that even if you were unaware of it, you could still be held accountable for committing this crime. Real estate fraud charges can lead to hefty fines and severe penalties, including prison or jail terms.

Your realtor's professional license could be revoked if found guilty of real estate fraud. If you're facing charges for real estate fraud in Long Beach, you can contact us at Long Beach Criminal Attorney. We have a proven track record of defending clients accused of similar crimes.

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Understanding Real Estate Fraud

In real estate fraud cases, fraud is considered the most crucial element. The prosecution should prove your role in committing fraud. Fraud involves using deception, trickery, or pretense to manipulate an unsuspecting victim into compliance. You could have participated in the crime or relied on information from third-party sources to help you commit real estate fraud.

Investigators can gather evidence to launch a case, irrespective of the real estate fraud committed. Most incidents of real estate fraud involve misleading interested parties before, during, or after the completion of a deal to buy property.

Since real estate transactions involve significant amounts of money, a conviction for any charge of real estate fraud could result in either felony or misdemeanor penalties. That means that, depending on the duration of the sentence term, you could lose both your freedom and job.

Real estate fraud involves many acts. Therefore, you should understand the nature of the crime to determine your chances of facing charges. Obtaining helpful information before trial allows you enough time to prepare for the prosecutor's case. This also increases your chances of winning the case.

Types of Real Estate Fraud

California law offers different legal theories and measures to make prosecuting real estate fraud cases easier. The reasoning is that an affected party could have incurred losses at different points during the real estate acquisition process. Fraud occurs in various transactions, including purchasing, renting, or leasing real estate property.

Real estate fraud can take several forms, including:

Foreclosure Fraud

If someone can't afford to pay for their mortgaged property and faces foreclosure, they can commit foreclosure fraud. California foreclosure fraud usually takes the following forms:

  • Title Transfer

A foreclosure adviser can convince a homeowner to transfer property ownership. The consultant can offer the homeowner the wrong advice by suggesting they can transfer their ownership rights and buy back their property, preventing them from going through foreclosure.

If the homeowner follows this advice, they will continue to live as renters on the mortgaged property, while the new owner will take the title. After that, the new owner will force the original homeowner to vacate the property.

  • Phantom Help

In this case, the foreclosure expert could offer to help the homeowner avoid foreclosure for a fee, but they would do nothing. When the homeowner discovers they have been scammed, it will be too late to stop the foreclosure process from proceeding.

  • A Bait and Switch Scheme

A title transfer is similar to this type of real estate scam operation. However, the homeowner in a bait-and-switch scheme has no idea that their ownership rights to the property are being transferred.

Most victims of bait-and-switch scams are unaware that they are giving up property ownership rights to a third party. Many believe they are receiving help in securing mortgage payment plans that are far more favorable and accommodating.

A consultant may also present homeowners with blank documents with the assurance that they will be filled up later in line with the contract's terms. Some individuals often use small, unclear, or illegible writings on paperwork, which makes it hard for homeowners to read and understand.

Straw Buyer Fraud

A "straw buyer" refers to anyone who buys property on behalf of another person because of their good credit rating. Usually, the straw buyer purchases the property to help the individual with a poor credit score. After that, the straw buyer transfers the property ownership to the other individual. Later, the individual with a low credit score would find it challenging to make the mortgage payments. Both individuals could face real estate fraud charges when the authorities find out.

Flipping Properties Illegally

Property appraisers, real estate agents, and mortgage brokers usually commit this type of real estate fraud. A real estate agent or appraiser flips a property when they inflate the property's value for the benefit of an unsuspecting buyer. It can also occur when a financial institution issues a loan for a sum more significant than the property's actual market value.

Flipping properties is common in California, although not prohibited. Purchasing real estate, making repairs, and then selling it at a much higher price are all legal as long as the price increase is reasonable and not the result of fraud.

Predatory Lending

In this case, a mortgage consultant could devise a loan product (like a home finance loan) and persuade a prospective homeowner to accept it. Despite the homeowner's belief that they have secured a good deal, the loan could include excessive or unnecessary fees that only benefit the consultant.

Mortgage Elimination

Companies can persuade borrowers that they can pay off their mortgage loans within a short period. As a result of the company's high costs, the borrower could end up paying more money than would have been possible under the mortgage plan.

Equity Fraud

Theft can take many forms, including equity fraud. Equity fraud occurs when someone acquires another individual's personal details through fraudulent means. The accused would then use the victim's personal information on mortgage documents and loan origination.

Origination of Fraudulent Loans

In this case, a real estate agent could assist an unqualified client to secure a loan to purchase property. This individual could make up documents to allow the homeowner access to them, and they can also persuade a prospective homeowner that they are eligible for larger mortgages.

The Legal Consequences of Foreclosure Fraud

Penalties for foreclosure fraud could be minor or felony, depending on the presiding judge's decision. You could face a maximum of one year in jail for a misdemeanor. On the other hand, you could face a maximum sentence of three years.

Theft by False Pretense

Theft committed with fraudulent intent can also result in real estate fraud. According to California PC 487, it is illegal to use false representations or promises to obtain money or property through a real estate transaction.

Elements of Real Estate Fraud

The prosecution has the duty of proving that you acquired property under pretense. They can demonstrate this by highlighting the following aspects of the crime:

  • You knowingly deceived a real estate seller or a mortgage financing organization.
  • You deceive unsuspecting individuals by using pretenses.
  • You received money from the aggrieved person because you assured them something that wasn't true.

Sources of evidence should be relevant to the facts of the case and prove your criminal responsibility. Because of this, you should expect the prosecution to prepare their case for trial adequately and try to convince the court that you are guilty.

Penalties for Real Estate Fraud

Charges and punishments for theft under pretense can range from misdemeanors to felonies. Therefore, you could face a one-year jail sentence if the court convicts you for a misdemeanor. Alternatively, you could be sentenced to a maximum of three years in prison under the provisions of a felony penalty.

Forgery of Records

Real estate fraud can be committed through the forgery of documents, which violates the provisions of PC 115. The prosecution has to demonstrate that you knew what you were doing and had the criminal intent to deceive the individual involved in the transaction.

The prosecution should also show that you recorded or registered a document indicating that you played a role in the unlawful activities. They will gather information through witness accounts, reviewing documents, and surveillance footage.

The district attorney also has to demonstrate that the contents of the document are fraudulent, indicating that forgery occurred. They should prove this element since it's connected to the fraudulent factor required for a successful conviction. By falsifying the contents, you would have led the aggrieved person to rely on incorrect information when completing a real estate transaction.

Lastly, the prosecutor has to show that you perpetrated forgery in a state government office. This element helps define the illegality of going against the laws governing property protection and enabling the delivery of appropriate services.

Penalties Associated With Document Forgery

Real estate document forgery is a wobbler crime. This means that it can result in either felony or misdemeanor charges. Therefore, a misdemeanor penalty carries a maximum one-year jail sentence. Alternatively, a felony conviction could result in three years behind bars.

Legal Defenses for Real Estate Fraud Charges

Having an experienced criminal defense lawyer on your side can increase your odds of avoiding the consequences of real estate fraud. The following are some common defenses against real estate fraud crimes:

No Intention to Commit Fraud

The prosecution has to demonstrate that you intended to perpetrate fraud to secure a conviction. In most cases, the prosecutor usually needs to meet this demanding threshold when demonstrating fraudulent intent. This allows you to be acquitted.

Your lawyer could argue that you only intended to assist the victim and that your motives were pure. He or she can also persuade the judge that you were unaware of the repercussions of your conduct.

You Had Consent From the Property Owner

In real estate fraud cases, it's common for the accused to engage fraudulently in connection with another person's property. There are situations when the property owner is an elderly person, which could result in more allegations of elderly abuse against you.

In most real estate fraud cases, elderly victims give other individuals consent to represent them in real estate transactions. The senior citizen could then have forgotten or become confused that they had previously given their consent.

You could argue that you genuinely wanted to assist the other individual and received their consent as the basis for your defense. This increases your chances of obtaining a dismissal or an acquittal.

False Allegations

An innocent individual can be falsely accused of real estate fraud. For example, the real offenders can lie to the police to avoid being held accountable for their actions. Your defense lawyer can assist you in resolving this situation by engaging a private detective. This detective will identify the real perpetrators, and you could even be compensated for malicious and wrongful prosecution. 

The Accused Is a Victim of Mistaken Identity

Real estate fraud usually occurs in organizations with numerous employees, like corporations. Occasionally, the victim could have thought you were the perpetrator, or someone else might have used your identity and other personal information to commit real estate fraud.

How Should You Handle Your Real Estate Fraud Case?

Similar to real estate transactions, a real estate fraud case requires strategy and negotiation. The Department of Real Estate has the authority to suspend or cancel your license in addition to filing legal charges. You could settle out of court with your attorney or through negotiations with the real estate agency.

If you wish to retain your license, you should seek the services of a skilled defense attorney. You should consider the following:

  • Discuss your objectives with your defense attorney.
  • Discuss the legal costs.
  • Do not talk to police officers.
  • Stay away from social media.
  • Be polite and dress decently.

Find a Long Beach Criminal Defense Lawyer Near Me

Real estate fraud charges can have severe consequences for you or those you care about, especially if they are associated with other offenses. If you're being investigated for real estate fraud, you should contact an experienced attorney right away.

A seasoned attorney can help you understand the allegations against you and build solid defense strategies for obtaining a plea deal or an acquittal. Our team at Long Beach Criminal Attorney is familiar with prosecution strategy and can assist you in navigating the complex legal process. Call us today at 562-308-7807.