Rental Fraud

BY JAY BRIJPAUL

Imagine saving six thousand dollars on minimum wage and then losing all of it to a scammer. There are scammers who use a realtor’s card information to make an appointment through an appointment application on a vacant property. The scammer, posing as the realtor, advises a prospective tenant that there are six other tenants who want the property. The scammer mentions that he would help the tenant because they seem like the kind of tenants his client is looking for. To secure the place, the prospective tenant needs to give a deposit immediately. She withdraws six thousand dollars in cash from her account and once she pays the scammer, she never hears from them again.

In other instances, scammers copy an advertisement, along with the photos, from a social media site such as Facebook, and places the same advertisement, with some changes, on another site such as Kijiji. Usually, the rent is attractive. The scammer would then try to get financial information. They are ready to make a deal quickly. Scammers usually ask prospective tenants to sign a lease without any background check. However, some are becoming more sophisticated, asking the prospective tenant to submit a rental application.

Fraudsters often pose as overseas investors. This way they can avoid meeting in person. The pandemic gave fertile ground to scammers where they could show homes virtually. Usually, the home they are showing virtually is a different property. They would ask a tenant to sign a lease as soon as possible and would suggest that for tax reasons if the tenant can pay cash, then, they would charge less rent. The next step is that they would suggest a place where one of their associates (usually the scammer posing as a friend of the owner, or neighbour) would be available to meet. They would then take the cash in exchange for a fake key. In other instances, scammers would ask for email transfer to an account that they would eventually close.

If a prospective tenant can visit the property, it would be more believable. Some scammers rent a property and then advertise it for rent. This way, they can lure prospective tenants who wants to see the property. Usually, they would sell you a sad story and offer you a discounted rent if you can give them cash upfront. There are situations where dozens of prospective tenants paid first and last month’s rent on the same property, only to realize that they were fooled.

There is another variation where the scammer answers an online posting and asks to pay by wire transfer such as through Western Union. The scammer usually “accidentally” overpays and asks for the rebate immediately. If the landlord refunds the extra payment before the actual funds are clear from the banks, the landlord is out of pocket.

As the proverb goes, “It takes a thief to catch a thief”.  Usually, we think from our own level of experience. A trustworthy person would trust everyone and, in the process, get fooled. Great online reviews, for example, can be written by friends and family members. In many instances, consumers tend to believe these reviews. With rental properties, tenants do not leave reviews unless it’s negative. The first step is to condition one’s mind to look at a situation from different angles. Never make a snap decision.

Properties advertised for rent on trusted sites like a real estate website such as realtor.ca are more believable. If you are working with a realtor you don’t know, ask for proof of identity. All realtors must carry a copy of their registration and, if asked, must show it. As a practicing realtor, to screen prospective tenants I may ask for a rental application before showing the property. If you are asked to do so, then, do not give any financial records at this stage. A job letter, driver’s license, and similar information can be given.

Renting is safer in large apartment buildings where there is an on-site property manager. Cross-check their information before proceeding. Many scammers assume the role as a property manager with the intention of defrauding a prospective tenant. If you are responding to an ad for such a building, ask to see the apartment first before proceeding. Usually, scammers target a single rental such as a condo suite or a house. They tend to target tenants who are looking for cheap rent.

When visiting a rental property other than apartment buildings, ask for proof of ownership. A recent property tax bill along with the owner’s photo identification is good. Most owners will understand your concern and consider you as being genuine. Other than that, check public records to make sure that you are dealing with the owner. If someone is representing the owner, such as a property manager, always ask for proof. Usually, there is a sense of urgency with fraudsters.

With rental properties, never offer to pay cash. If the other party asks for cash, then question it. It can be a red flag. Money paid via e-transfer, or a cheque or bank draft creates a paper trail. Scammers always want to cover their tracks. Never agree to view a property remotely. By seeing it in person, you will be able to gauge the situation.

Always double-check the lease agreement. There are many instances where landlords or property managers prepare a lease agreement for a higher amount and give a discount. This is dangerous because they can argue that the real rent was the higher amount. The lease may have additional rent for parking and appliances.

Landlords must also be careful. There are many tenants who know how to outsmart novice landlords. The key is to choose tenants based on employment. Always choose a tenant with stable employment. In the event of default, you can garnish their wages. With self-employed tenants, ask for at least two years of tax returns. This way, you can assess their situation. Consider using an experienced realtor to assist. There is a cost involved but it’s worth it.