Property Fraud: Reasons and Precautions for Property 2023! - healthforty

Property Fraud: Reasons and Precautions for Property 2023! - healthforty

With rising land/property prices around the world, real estate has become one of the most expensive assets people own, sometimes even investing their life savings in land/property. However, being a high value investment, real estate transactions generally carry risks like any other transaction of this size.

Property Fraud

Title fraud is a type of fraud in which the criminal steals the identity of the property owner, usually by forging documents or defrauding the owner (without the owner's knowledge or consent). Once these illegal documents (property documents) are created, the criminal typically secures as much debt as possible in lieu of the property (as collateral), leaving the property at risk of foreclosure (or seizure) by the bank. or lending institution. Non-payment

Most of the time, such fraud is committed on land and properties that are vacant for a long time (especially with owners residing in other states/countries). Additionally, properties with unclear ownership (unclear title) or leased properties are also vulnerable to this type of fraud.

Types of Title Fraud

Title fraud can be perpetrated by criminals forging your signature and making you look like a seller who sold them your house. Alternatively, the criminal can also falsify property documents and use illegal means in the government to update (change) the property records in the municipal records. By adopting these means, he/she can borrow as much as possible or mortgage the property from it without the knowledge of the actual owner and take multiple loans of lakhs/crores (thousands/millions) in local currency.

They can also illegally sell the land/house/property to someone else and get money that then goes into the public domain.

Listed below are the types of title fraud that actually exist:

1. Forgery of forged documents:

When someone signs her name on the bill of sale without her knowledge, the deception process is known as 'false deed' fraud. Such fraud is perpetrated by criminals who have excellent connections with municipal authorities and who can tamper with public records without the beneficial owner receiving any indication of the change of ownership in the public records. This type of forgery involves a forged signature that is notarized and creates a new bill of sale.

2. Fake title loan:

When someone creates a false identity in her name (as the property owner) just to accept a secured loan or mortgage in lieu of her property, this is called "false title loan" fraud. This type of fraud is difficult to detect and only comes to light when the defaulter defaults and the representative/loan authority knocks on the door of the true owner only to find out about the fraud.

3. Intangible Property Title:

There may be cases where the seller may offer you a property that may be in dispute, listed as collateral with a bank or NBFC, leased or with some fees (including liens). Buyer must perform due diligence to learn of such matters.

4. Property sold on agricultural land:

The land use status of the land/property needs to be verified. Any type of residential or commercial development on agricultural land requires CLU (Change of Land Use) approval. Many sellers keep the new owner aware of this, which can result in delays, additional costs for the new buyer later, or even prevent building permits from being obtained.

5. Status of Property (Freehold/Leasehold):

When buying a property, the buyer should always verify if the property is a freehold or leasehold. He may have to pay additional fees to convert a rental property to freehold.

6. Real contract or easement:

The buyer should inquire about the site map and verify its approval before purchasing the property. Many sellers may sell their land with parking restrictions, open porches, or even hidden features that may conflict with neighbors' 'right-of-way' or some utility infrastructure (such as power poles or underground sewer lines).

Impact of digitization:

While digitization has brought a lot of transparency to the ownership status of property in the more developed world, the real estate sector in India is also moving towards building a better database of all ownership and property details. While the implementation of more and more technological solutions helps to easily deflect fraud and facilitate due diligence, it is still advisable to hire an experienced and professional person to do the job.

However, as the government is busy conducting digital land mapping in all parts of the country under the SVAMITVA (Technologically Advanced Village Survey and Mapping in Village Areas) scheme, the number of frauds related to faulty property may decrease in the short term. the future

Consultation to avoid real estate fraud:

As a property owner, you must be very careful about what you are signing and the exact terms and conditions when making any financial transaction. In addition, you will not lose any messages, mail or other forms of communication from any authority and you will involve a lawyer or legal expert if you detect any inconsistencies.

As a new property buyer, you need to check a few documents to make sure you are not buying a plot/house that is being sold fraudulently. These points will definitely help you reach a clean settlement without any lawsuits or financial loss that may arise later on.

Below is the list of documents that must be reviewed and verified before the contract:

1. Deed of sale:

Always make sure the deed of sale is registered and has a clear title to the property in the name of the current owner. Any problems or discrepancies should be investigated.

2. Mother script:

A continuous sequence reflects the history of the property/land in terms of ownership. The municipality may certify the authenticity of this document.

3. Identity of the Seller:

You need to verify the seller using the Aadhaar card, PAN card and verify these records against the tax receipts filed by the property owner at the municipal records.

4. Certificate of responsibility:

To verify the land/home loan, title transfer, mortgage, or recorded transaction against the property. Additionally, the buyer must also check the following documents to avoid any other type of fraud:

5. Approved building plan:

Jurisdiction to be acquired from the Commissioner (or an official authorized by the Commissioner) with respect to the transferred/under-construction property.

6. Conversion certificate:

It is essential to check the conversion certificate to determine if the land/parcel/property is not agricultural land. 

The buyer must also review and verify the power of attorney, if any, and verify the status of all tax receipts issued up to the date of sale. The municipality must obtain them from the previous owner to check for arrears or defaults.