real estate FRAUD How to deal with
raud changes every-
thing — how we live our
lives and how we conduct
business. Now, the use of
certified cheques and bank
drafts no longer guaran-
tees the immediate and safe delivery of
funds in real estate closings.
Because of the growing number of
fraudulent certified cheques and bank
drafts, real estate practitioners must
spend more time protecting their clients
and themselves. Fraudsters are becoming ever more proficient at producing
fraudulent certified cheques and bank
drafts, and are always on the lookout for
a trusting lawyer with a trust account to
wreak their havoc through hard-to-detect sophisticated scams.
Often busy solicitors find themselves
acting for clients they have never met.
Some clients are offshore and the lawyer may never expect to meet them.
They have no meaningful way to assess
these clients before closing, sometimes
with disastrous consequences. Even
long-standing clients may become dangerous if pushed to the edge by a failing
economy.
We and members of our staff must
be vigilant and become experts at fraud
detection. Sometimes small details are
the tip-off that there is something not
F
JEANETTE ADAMS / IMAGES.COM
SALLY
BURKS
quite right.
Some lawyers are attempting to verify
certified cheques and bank drafts by
calling the issuing bank to determine
whether funds are in place to support
the instrument. Although this is a good
first step in guarding against fraud,
banks are not always willing to provide
that information by phone. Some banks
are nervous that if they provide wrong
information, they will become responsible for the loss suffered by the lawyer
and the devastation caused to the client.
So what can real estate lawyers do to
protect the integrity of the real estate
closing? We must have our clients and
others wire closing funds to our trust
accounts. That is the only method by
which funds are guaranteed, irrevocable
and can be accessed to support the certified and non-certified cheques we will
write to close transactions.
Clients will undoubtedly complain
about having to wire funds, but the
process is probably no more time con-
suming than attending at the bank to
obtain a certified cheque which the cli-
ent would otherwise have to produce.
Once people are told wiring is another
tool in the fight against fraud, they will
understand the requirement. If there is
a real push back from the client about
wiring funds, that may be a hint your
client is a fraudster.
