When is a Real Estate Deal Considered Real Estate Fraud

real estate fraud laws

B

uying and selling property is a way of life in California. People are constantly moving. Most of the time, the process goes smoothly and everything is kept above board, but every once in awhile a deal goes sour. The challenge many buyers (and even sellers) struggle with is knowing when a real estate deal simply doesn’t go as planned and when they’ve been the victim of real estate fraud.

According to California lawmakers, real estate fraud takes place when one of the parties involved in a real estate transaction knowingly commits fraud while conducting some sort of real estate transaction.

In California, real estate fraud includes:

  • Forged deeds
  • Breaking foreclosure fraud statutes
  • Falsely representing a property
  • Breaking rent skimming laws

In California, the most common forms of real estate fraud include:

  • Straw buyer schemes
  • Illegal property flipping
  • Mortgage fraud
  • Foreclosure fraud

Different types of real estate fraud are handled by different sections of California’s penal code. For example, someone who is found guilty of committing a rent skimming scheme has violated Civil Code 890. Someone who violates Penal Code 115 is guilty of filing forged real estate documents.

Grand Theft Real Estate Fraud

A stunning number of the real estate fraud cases that make their way into the California court system involve grand theft real estate fraud. According to California Penal Code 532 PC, this type of real estate fraud involves the seller (or real estate agent) deliberately misrepresenting the property.
To be found guilty of grand theft real estate fraud, the seller must have deliberately misrepresented the property. Examples of this include:

  • Lying about property lines
  • Hiding important information that was discovered during a home inspection
  • Showing a different property than the one listed in the paperwork the buyer signed
  • Not telling about contracts, such as rental agreements or easements, connected to the property

There have been some situations where a buyer was actually convicted of grand theft property fraud. These cases usually involved the seller lying about the property that prompted the buyer to quickly sell the property for far less than it was worth.

Strictly speaking, California’s real estate fraud cases that involve grand theft by false pretenses are wobbler laws, but in most situations, cases involving real estate are considered felonies since they usually involve more than $950.

If you’re found guilty of felony grand theft real estate fraud, you could face spending three years in prison.