Real estate and mortgage fraud are serious offenses in California, often resulting in severe penalties for those involved. Whether you're buying, selling, or renting property, fraud can occur in various ways—sometimes without the parties involved even realizing they’ve committed a crime. In this blog, we’ll explore the common types of real estate fraud and what consequences you could face if charged.
Common Offenses in Real Estate and Mortgage Fraud Cases
In California, several distinct offenses fall under the umbrella of real estate and mortgage fraud. These offenses are often tied to deceitful practices aimed at gaining an unfair advantage in property transactions. The most frequently prosecuted offenses include:
- Theft by false pretenses
- Rent skimming
- Forgery
- Foreclosure fraud
Let’s break down each of these offenses and how they relate to real estate transactions.
Theft by False Pretenses
Theft by false pretenses occurs when a person intentionally deceives another party into transferring property, money, or assets. In real estate, this could happen when someone tricks a buyer into overpaying for a property by providing false information about its value or condition. It could also involve lying about legal ownership to manipulate someone into handing over money or title to a property.
Rent Skimming
Rent skimming can occur in two ways. The first form involves someone collecting rent on a property they do not own. This is more common when a scammer takes advantage of tenants unfamiliar with the actual property owner.
The second form occurs when a person buys a rental property and fails to use the rental income to pay the mortgage during the first year of ownership. This practice is illegal in California and can lead to serious consequences, especially if repeated.
Forgery in Real Estate Transactions
Forgery is a common issue in fraudulent real estate deals, often involving fake or altered documents. For instance, forging signatures on property deeds or other official documents is illegal. Filing these falsified documents with a government agency, like a county clerk’s office, is considered a criminal act.
Foreclosure Fraud
Foreclosure fraud preys on vulnerable homeowners who are at risk of losing their homes. Scammers may offer fraudulent foreclosure counseling services or propose fake "rent-back" schemes that trick homeowners into signing over their property. These fraudulent schemes often result in the homeowner losing their home entirely without realizing the full extent of what’s happening until it’s too late.
Common Real Estate Fraud Schemes You Should Be Aware Of
Real estate and mortgage fraud schemes come in many forms. Here are a few that are frequently encountered:
- Bait-and-Switch Foreclosure Scams:
Scammers convince homeowners that they can rent their property back after transferring the title. In reality, they trick the homeowner into handing over ownership without fully understanding the legal implications. - Foreclosure Consulting Fees:
Scammers may promise to stop a foreclosure in exchange for a one-time fee. However, they often fail to provide any real service after receiving payment, leaving the homeowner in a worse position. - Predatory Lending:
Lenders may tack on illegal fees or charges to mortgage agreements, taking advantage of the complex nature of the paperwork. Many borrowers are unaware that they’re being overcharged. - Appraisal Fraud:
In some cases, appraisers are paid off to inflate the value of a property, allowing the seller to secure a higher price than the property is worth. This harms buyers who are left paying more than they should.
What Are the Penalties for Real Estate and Mortgage Fraud?
The penalties for real estate and mortgage fraud in California can vary depending on the severity of the crime and your criminal history. Common penalties include:
- Grand theft and foreclosure fraud:
These offenses can be charged as misdemeanors or felonies, depending on the details of the case. If charged as a misdemeanor, you may face up to one year in county jail. Felony charges can result in up to three years in prison. - Rent skimming:
First-time rent skimming offenses are usually not prosecuted as crimes. However, repeated violations can lead to felony charges, carrying serious penalties. - Filing false documents:
Forging and filing false documents with a government office is always considered a felony in California, with penalties of up to three years in county jail and a fine of up to $10,000.
Given the complexity of these charges and the potentially severe consequences, it’s critical to seek legal counsel as soon as possible.
Protect Yourself from Real Estate Fraud Charges
If you are facing charges related to real estate or mortgage fraud, you need an experienced attorney to guide you through the legal process. Contact Law Office of Michael L. Fell at (949) 585-9055 to schedule a free consultation and learn how we can help protect your rights and build a strong defense.