Criminal groups are increasingly using fake tenant applications to commit real estate fraud, at a time when a growing number of prospective renters are also falsifying information to gain an edge in a hyper-competitive market.
The surge in amateur cheating in the Greater Toronto Area is likely forcing groups involved in total title fraud, in which imposters sell homes without their owners’ knowledge, to be “more diligent in their preparations,” said Brian King, chief executive officer of King International Advisory Group, who has been investigating these cases. It’s a trend that may make it even harder for real estate professionals to spot the more dangerous kinds of fakes.
The recent experience of one Toronto real estate brokerage exemplifies the risks. The Bahl and Yew Team, which handles large volumes of leases in the city’s downtown, declined a suspicious tenant application in November, 2021. One of their brokers later spotted the applicant in a January, 2023, CBC report that identified the man as an alleged impersonator linked to high-profile cases of title fraud.
“I remember this guy,” said broker Alexandra Bulloch, who oversees the firm’s vetting of tenant applications, of seeing his picture in the news article.
Mr. King said the picture on the forged driver’s licence reviewed by The Bahl and Yew Team was used in several title-fraud attempts, including a successful one involving the sale of a home in Etobicoke that made headlines last month. While the photo remained the same, the name and driver’s licence number were different from those used in other cases.
Fraudsters impersonating homeowners to sell real estate on the rise since pandemic
The rest of the fraudulent application also shared several details with others used by the man, including the same fake employer and an accounting firm that turned out to be non-existent, he said.
Mr. King described the man behind the application as an impersonator who has acted as a prospective tenant in several occasions in order to gain access to properties that criminal groups subsequently attempt to sell with the help of a different set of stand-ins who act as the homeowners.
The Globe and Mail has not been able to verify the man’s true identity and is not publishing the name used in the application submitted to The Bahl and Yew Team out of concern it may belong to a victim of identity theft.
Fraudulent home selling is a complicated scheme and represents a step up from the simpler cases of mortgage fraud that Mr. King says began to spike in the GTA in the earlier phase of the pandemic.
As property prices soared and real estate transactions went online, criminals saw an opportunity to take out second mortgages by posing as homeowners, he said. But since late 2021, “the same groups that were doing the mortgage fraud switched to total title transfers.”
That’s when Ms. Bulloch said her firm also started to notice an increase in falsified tenant applications. The brokerage is now spotting at least five fakes a month, up from just one or two a year 18 months ago, she said.
Impersonators posing as homeowners linked to 32 fraud cases in Ontario and B.C.
The shift is driven by renters who are fudging their applications to “get a foot in the door” in an extremely competitive market, said Reuben Labovitz, a real estate agent at Fox Marin Associates, a Toronto brokerage that handled around 160 rental leases last year.
At real estate brokerage Strata.ca, which focuses on the condo market, sales representative Galina Sheveleva described prospective renters editing otherwise legitimate employer letters to boost their income, embellishing LinkedIn profiles and asking friends to pose as former landlords in an effort to land a lease.
“One major red flag, and I don’t go any further,” Ms. Sheveleva said.
Renters who are telling fibs to find somewhere to live likely heightened the fraud awareness of landlords and real estate agents, Mr. King said. But it may have made criminals more cautious as well, he added.
Eager to avoid extra scrutiny, for example, fake tenants often volunteer extra documentation, such as pay stubs, which may not be required, he said. Some groups even go to the extent of registering fake businesses they subsequently reference in forged employment letters.
At The Bahl and Yew Team, the crucial giveaway was the deposit cheque. During the firm’s 12-step vetting process, which included an in-person interview, Ms. Bulloch noticed that the employer mentioned in the application did not have a website, which can sometimes be the case for small businesses. There was also a small hesitation when the candidate was asked about a personal detail, she said.
Everything else, though, appeared in order, including the man’s driver’s licence, which the firm checked using the Ontario government’s online look-up tool.
It was when the man sent in a cheque with the first and last month of rent that carried some other person’s name that the brokerage decided to pull back. The man did not offer a convincing explanation as to why the cheque was not in his own name, Ms. Bulloch said.
“We just gave the funds back and went our separate ways,” she said.
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