Real Estate Fraud in San Diego
Fraud is knowingly misrepresenting or concealing certain facts to induce someone else to act in a way that is harmful to that person's interests. Real estate fraud is theft by fraud committed in connection with a real estate transaction. California has criminalized theft and divided it into two degrees, grand theft and petty theft. Under California Penal Code section 487, "grand theft is committed when the money, labor, or real property taken is of a value exceeding nine hundred fifty dollars".
Prosecution's Burden of Proof for Real Estate Fraud
Basically, to convict someone of real estate fraud as a form of grand theft under California Penal Code 487, the prosecutor must prove each of the following:
1. The defendant knowingly and intentionally deceived a real estate owner or mortgage lender by making a false or fraudulent representation;
2. The defendant did so intending to persuade the owner or lender to let them take possession and ownership of the property or loan proceeds;
3. Relying on the defendant's false representation, the victim let the defendant take possession and ownership of the property or loan proceeds.
Common Types of Real Estate Fraud in San Diego
There may be completely legitimate real estate transactions that have similar circumstances as the real estate fraud schemes outlined below, but a skilled attorney will conduct their due diligence to confirm their hunch. If the hunch proves to be true, the attorney should be sure that their client understands what their client is getting into or how to get out of the transaction immediately.
This type of fraud occurs in the form of a leaseback. When a company tells desperate mortgage holders that they can save their home if the borrowers enact a temporary title transfer to the rescuing company. The company then promises that the borrower can stay in the home and pay rent during the temporary title transfer time. At this time, the rescue company sells the home once they obtain the title from the real owner. Because the rescue company claims it is a leaseback, they often only pay the owner a minimum amount that rarely reflects what the owner would have made if they had sold the property on the market. In the meantime, the owners remain on the hook for the original mortgage payments on their home.
This type of fraud occurs in the form of eradication. When a program offers borrowers a way out of their mortgages in a relatively quick period of time. Borrowers are convinced that there are loopholes that will allow the borrowers to escape the mortgage, and these companies charge a premium price for this service.
Flipping involves buying a property and then quickly selling it at a price that is well above its appraised value. There is a fine line between flipping for a profit and illegal flipping. California considers illegal flipping when it violates California’s fraud laws.
This type of fraud occurs in the form of theft. When a person gets the personal information of the victim and uses this information on mortgage or loan origination documents.
Fraudulent Loan Origination:
This is when real estate professionals help unqualified buyers get the money necessary to purchase a home with an FHA-insured mortgage. Real estate professionals in this situation promise potential homebuyers that they will qualify for mortgages that are much larger than the buyers’ ability to repay, and many times falsify official documents to assist homebuyers in obtaining these properties.
Rental fraud occurs when a person files false satisfaction of loan documents with the local court. In order to file this paperwork, the renter has to forge the owner’s signature, the bank officers’ signatures, and bank seals. This document shows no encumbrances on the home, and the individual is free to take out new loans on the property—which he/she usually does.
When a property owner collecting rents and deposits on property without making payments on the loan and pocketing the rents.
Real Estate Fraud Charges Are Filed As a Misdemeanor or a Felony
Wobbler offenses are crimes that the prosecution has discretion to charge as either a misdemeanor or a felony. This decision is important to your defense because it will determine the penalties that you could face if convicted under California Penal Code section 487. To determine the severity of the charges for real estate fraud, prosecutors look at two things in particular:
- The value of the real property;
- The defendant’s criminal history.
Penalties For Real Estate Fraud
In California when an offense of real estate fraud is charged as a Misdemeanor and you are found guilty under PC 487, you may:
- Be sentenced up to 1 year in county jail;
- Receive a fine of up to $1,000;
- Informal Probation.
In California when an offense of real estate fraud is charged as a Felony and you are found guilty under PC 487, you may:
- Be sentenced 16 months to 3 years in state prison;
- Receive a fine of up to $10,000;
- Formal Probation.
Real Estate Fraud Enhancements
An enhancement offense is an offense whose commission alone increases the penalties for the original crime. In California, if you are found guilty of real estate or mortgage fraud, you could be facing additional penalties if they are charged as felonies and if the loss to the victim is significant enough.
- If the loss to the victim was more than 65,000, you could receive an additional year.
- If the loss to the victim was more than $200,000, you could receive an additional two years.
- If the loss to the victim was more than $1,300,000, you could face an additional three years.
- If the loss to the victim was more than $3,200,000, you could face an additional four years.
- If convicted of two or more related acts of real estate fraud, each charged as a felony, and the loss to the victim was more $100,000, you could face an additional one to five years in state prison.
- If you hold a California real estate broker's license, a real estate or mortgage fraud conviction could lead to losing your license.
How can we prove you are not guilty of real estate fraud?
This is a very technical crime, and so the best advice is to find a skilled local criminal defense attorney to guide you through the processes. The basic plan is attack each element of the crime, for the prosecution must prove all of them beyond a reasonable doubt.
Some common legal defenses to California real estate fraud include:
- Lack of Intent to Defraud
- Valid Consent
- False Accusation
Your Best Defense against Real Estate Fraud Charges
There are different variations of real estate and mortgage fraud cases but they all have one thing in common, they carry life changing penalties. If you are charged with a real estate fraud offense or face charges for other types of fraud or even multiple racketeering charges, contact an experienced criminal defense attorney immediately to make sure your case is resolved as quickly and smoothly as possible. Attorney Vik Monder can build you a strong defense.