California fraud laws are pretty broad and cover different types of crimes. The most common types of fraud include financial fraud, forgery and identity theft, insurance fraud, and real estate and mortgage fraud offenses. Generally, a crime is classified as a fraud when the defendant commits an act to obtain unfair or undeserved benefits. Real estate fraud happens when a person commits fraudulent conduct during the financing, sale, purchase, or rental of real estate property. If you face charges for real estate fraud in Anaheim, CA, we encourage you to reach out to the California Criminal Lawyer Group for reliable legal guidance and representation.
Prosecutors are always aggressive when investigating and prosecuting real estate fraud cases. The cases cause a public uproar because of their ability to quash the hopes of unsuspecting victims blinded by the dream of homeownership. It is hard for defendants to fight charges, especially when they lack a competent defense team. We can help you protect your reputation, freedom, and best interests.
Real Estate Fraud Defined
California Fraud law provisions describe real estate fraud as fraudulent conduct committed during the sale, rental, financing, or purchase of real estate property. The laws cover fraudulent conduct that occurs during any stage of a real estate transaction. This includes during:
Property appraisal and sale
Real estate fraud is a white-collar crime prohibited under several different laws. The prosecution will consider the facts of a case, the number of victims involved and the financial losses suffered before deciding the most appropriate statute to ensure maximum penalties.
For instance, when real estate fraud involves a high dollar amount, the prosecutor can impose grand theft charges under Penal Code 487. Other statutes used to penalize real estate fraud offenders include:
Theft by false pretenses— Penal Code 532
Rent skimming — Civil Code 890
Foreclosure fraud — Civil Code 2945 and 2945.4
Filing a forged document (deed) — Penal Code 115, etc.
California Statutes That Prohibit Real Estate Fraud
Four main statutes prohibit real estate fraud. Often, the crime is a wobbler that can attract misdemeanor or felony charges. Prosecutors can pursue a case under state or federal laws depending on the facts unveiled during investigations and a defendant’s criminal history.
The four California statutes that criminalize real estate fraud include:
Penal Code 487 — Grand Theft
Penal Code 487 criminalizes taking another person’s property, labor, or money worth $950 or higher. One can commit grand theft by:
The prosecution must establish certain elements beyond a reasonable doubt to prosecute you under the grand theft statute. The prosecutor will first consider how you committed the crime.
In real estate fraud cases, defendants can illegally deprive their victims of money or property by committing grand theft by false pretense. The victim(s) suffer a loss of $950 or more, and the defendant seeks to maintain both possession and ownership of the illicitly obtained money or property.
California’s Penal Code 532 makes it illegal to commit theft by false pretense. The prosecution must establish the following elements beyond a reasonable doubt to convict you:
You willingly and knowingly deceived the Victim(s) by providing false information (you made a false pretense)
You intended to convince your victim(s) to grant you possession and ownership of their property
If it were not for the false pretense, the victim(s) would not have given you control and ownership of their property
“False pretense” is an act aimed at deceiving another person. You can make false pretense by:
Providing false information
Making a reckless claim stating something is true, yet you do not believe it is
Failing to provide information you are obligated to provide
Making fake promises, you have no intention of keeping
Grand theft is a wobbler offense. When charged as a misdemeanor, the penalty includes:
A county jail sentence for up to 1 year
A grand theft felony conviction is punishable by:
Incarceration in state prison for up to 3 years
It is crucial to note that the prosecution can still charge you with theft by false pretense under Penal Code 532, even if the stolen property is worth less than $950. The crime will be classified as petty theft, attracting misdemeanor charges.
A petty theft conviction is punishable by:
Imprisonment in county jail for a maximum of 6 months
A fine not exceeding $1,000
Civil Code 890 — Rent Skimming
Rent skimming is among the most common types of real estate fraud. One act of rental skimming attracts a civil lawsuit, although a case of multiple rent skimming acts is subject to criminal penalties.
Under Civil Code 890, the crime involves knowingly and willfully:
Collecting rental income without completing obligatory debts (pocketing rent proceeds during the first year of acquiring a property without settling mortgage payments)
Renting another person’s property without their consent and keeping the income for personal gain (the prosecution can add trespass charges under penal Code 602)
If charged with one count of rent skimming, a civil lawsuit can result in the following penalties:
Victim compensation for incurred financial losses
Reimbursing the incurred attorney fees
Punitive damages if the defendant acted in an exceptionally harmful manner
Multiple counts of rental skimming are a wobbler offense. The prosecution will consider the facts of a case and a defendant’s criminal history before opting to impose felony or misdemeanor charges.
A felony conviction for rental skimming is punishable by:
Incarceration in state prison for 16 months, 2 or 3 years
A maximum fine of $10,000
When the crime is charged as a misdemeanor, the penalty is:
Up to 1-year county jail sentence
Penal Code 115 — Filing a False Document
Under Penal Code 115, it is unlawful to knowingly register, file, or record a forged or falsified document in a California public office. It is a felony to forge a real estate deed and file it with any public office.
The prosecution can obtain a conviction by establishing the following elements beyond a reasonable doubt:
You submitted a deed with a California public office for registration, recording, or filing
You knew that the document was forged or falsified when filing
If the document were authentic, you would have legally filed it
The law is vague when defining the term “document.” It could refer to any written deed related to real estate property. This includes:
Deeds of trusts
Quitclaim deeds, etc.
Violating Penal Code 115 is a felony. If convicted, you risk facing the following penalty:
A jail term of up to 3 years
A $10,000 maximum fine
Depending on the facts of a case, you could be eligible for probation instead of imprisonment. However, probation is off the table if you have a prior Penal Code 115 conviction, you are convicted of more than one count of filing a forged deed, or the victim(s) suffered a loss of $10,000 or more.
Moreover, violating Penal Code 115 is a white-collar crime subject to sentence enhancements under the following circumstances:
Apart from the fraud conviction under Penal Code 115, you are convicted of other felonies within the same proceeding
You have priors that show a criminal conduct pattern
A case involves two or more victims or one victim defrauded on separate occasions
The victim(s) suffered losses amounting to $10,000 or more
If the court highlights any of the above aggravating factors, a judge can impose the following penalty enhancement:
An extra 5-year jail term in state prison
An additional $500,000 fine or two times the victim(s) losses (whichever is greater)
Civil Code 2945 and 2945.4 — Foreclosure Fraud
Since the collapse of the housing market, cases of foreclosure fraud have been quite rampant. A new breed of real estate professionals called “foreclosure consultants” can help stop property foreclosure in exchange for a small fee. A deal becomes a crime when the consultant gives false promises of being able to delay or prevent foreclosure.
Under Civil Code 2945.4, it is unlawful for a foreclosure consultant to engage in any of the following acts:
Obtaining a property owner’s power of attorney
Gaining an interest in a client’s foreclosed home
Receiving payment for services offered by a third party without the property owner's knowledge
Gaining an interest in a property or lien against a property owner’s wages
Demanding a fee before performing the contracted services
Charging more than 10% fees for loans granted by a consultant to a property owner
Entering a property owner into any contract that does not adhere to the regulations stipulated under Civil Code Sections 2945.2 and 2945.3
Presenting a contract to a property owner to help them arrange the release of excess funds after a trustee’s sale
Foreclosure fraud is a phantom help scheme aimed at preying on vulnerable and desperate homeowners who want to save their properties from foreclosure. A deal becomes real estate fraud when a “consultant” takes advantage of the situation for personal benefit yet cannot possibly provide any meaningful assistance.
Like most types of real estate fraud, foreclosure fraud is a wobbler charged as a felony or misdemeanor depending on various facts of a case such as the number of victims, a defendant’s criminal past, and the amount of losses suffered.
A foreclosure fraud felony conviction attracts the following penalty:
Up to 3 years’ incarceration in state prison
A fine not exceeding $10,000
A misdemeanor conviction is punishable by:
Incarceration in county jail for up to 1 year
A maximum fine of $1,000
Like filing a forged deed, foreclosure fraud is also subject to sentence enhancement if a case involves aggravating factors.
Common Types of Real Estate Fraud
Various types of fraudulent conduct can happen during any phase of a real estate transaction or deal. Some of the most common types of real estate fraud include:
Mortgage fraud is the willful and unlawful act of lying or omitting information a lender or underwriter uses to purchase, fund, or insure mortgage loans. A mortgage lender or borrower can commit this type of fraudulent activity.
The two types of mortgage fraud include:
Mortgage fraud for property — A mortgage borrower commits fraud by lying or omitting information about their income or assets on their mortgage application. The lender, therefore, approves an undeserved loan and the borrower fraudulently manages to buy or maintain property ownership.
Mortgage fraud for profit — A mortgage lender like a banker or appraiser can commit fraud for profit by committing fraudulent acts during the mortgage lending process. The main perpetrators of this type of fraud are real estate industry insiders with access to processes where they can steal equity or cash from mortgage lenders.
The primary motivation behind fraud for a property is a borrower’s desperation to obtain or retain a property. When truthful information can lock them out of the much-needed financing, they commit fraud to have their mortgage approved. On the other hand, the primary motivation behind fraud for profit is to maximize personal profits during real estate transactions.
Title Fraud schemes
Title fraud, also referred to as deed fraud, occurs when someone uses fraudulent methods to obtain a victim's property deed. They then use the property’s equity to get loans. Unfortunately, victims only find out about the damage once their home is on the verge of foreclosure.
Another method of committing title fraud is tricking an owner into signing over property rights. A homeowner facing foreclosure can agree to the deal, hoping that a “foreclosure consultant” can be of assistance. Unfortunately, the defendant drains a property’s equity only for a homeowner to realize the scandal when being evicted.
Title fraud schemes are a form of equity skimming that leaves the victims in a more dire position after losing their home, equity, and credit rating. The perpetrators of the offense often target desperate homeowners on the verge of foreclosure with a fake promise to save them from their overwhelming financial obligations.
Bait and Switch
Bait and switch schemes involve morally suspect sales tactics to lure customers using untruthful information. They are a type of real estate sales fraud where the advertised property is nonexistent or of lower quality than indicated in an advertisement.
The seller uses unethical means to present an upsell. This is a deceptive trade practice that involves fraud or misinterpretations of a business deal. Bait and Switch schemes are illegal under Common Reporting Standard (CRS) 6-1-105.
Phantom Help Scams
Phantom help scams, also known as phony counseling schemes, are among the most common types of real estate fraud. The schemes involve intentional misrepresentation during a real estate transaction.
Perpetrators pose as professionals that can save desperate homeowners from impending foreclosure. Phantom help scams are criminalized under California’s foreclosure fraud law Civil Code 2945.4.
Straw Buyer Schemes
Straw buyer schemes involve purchasing real estate property on behalf of someone else who would otherwise not qualify for the purchase. It could be that the person who wants the property has bad credit or cannot legally make the purchase.
Essentially, straw buyer schemes involve the use of fraud to make an unlawful real estate transaction. If a scam involves the “straw” helping someone else qualify for a home loan, the prosecution can impose mortgage fraud charges.
Illegal Property Flipping
Property flipping is a legal investment strategy that involves a real estate investor buying property, renovating it, and selling it for profit. The investment turns illegal when an investor uses unlawful schemes or fraud within the process.
For instance, property flipping becomes illegal when an investor inflates the listing prices based on nonexistent home improvements. It is also unlawful to use an unscrupulous appraiser to rate a property at a value higher than its actual worth. In some schemes, even the real estate broker knows about the inflated figures in the fraudulent appraisal. The only one in the dark is the unsuspecting buyer.
Illegal property flipping is a grave offense that attracts harsh properties. The prosecution can add bank fraud on top of the criminal property flipping charges when an offense also involves using the scam to qualify for a bank loan.
Predatory lending involves using unfair, abusive, or deceptive lending practices for real estate transactions. Predatory loans lack transparency and come with high fees and interest rates that strip borrowers of property equity.
Lenders will often target loan borrowers with an inferior understanding of financial transactions. They use fraud to lure and encourage borrowers to take loans they cannot reasonably repay. Eventually, the borrower defaults and loses both money and property.
Best Defenses to fight Real Estate Fraud Charges
The ideal defenses to fight real estate fraud charges vary from case to case. A skilled attorney can evaluate every aspect of your case to establish tactics with the highest probability of yielding a suitable outcome.
Sometimes, a suitable outcome means facing misdemeanor instead of felony charges. It is adequate to have the charges or sentencing reduced in other cases. If the accused is innocent, the goal must be to have the charges dropped or obtain an acquittal.
Let us have a look at the best defenses a competent criminal defense attorney can use to achieve the desired outcome:
No Intent to Defraud
Irrespective of the type of real estate fraud you are accused of committing, the prosecution must prove beyond a reasonable doubt that you had the intent to defraud a victim or enjoy an undeserved financial gain.
Your attorney can argue that you simply negotiated aggressively to receive maximum profits, but you did not use deceit at any point of a transaction. The alleged victim pressed charges merely because they were unhappy with the outcome of an otherwise legal transaction.
It is not enough to claim you did not use deceit. For this defense to work, you need to present material or documentation that waters down the allegations of fraud during a transaction. An experienced attorney can find the best way to attack elements of the crime and persuade the court to drop the case or reduce the charges.
When proving lack of intent, your attorney can table a statement showing that purportedly false information is accurate and the victim misinterpreted it. The expert can also undercut the prosecution’s evidence of proving intent by arguing that you worked in good faith and with the reasonable assumption that your statements during a transaction were truthful.
Moreover, when a case involves a conspiracy to commit fraud, a skilled fraud lawyer can prove that you were not the primary actor in the offense. You were going about your usual business with no intent to defraud the victim. You would not have reasonably suspected or unveiled the ongoing conspiracy based on your position in a company.
It is typical for real estate transactions to involve multiple players. Sometimes, the victim mistakes an innocent realtor for the real fraud culprit. Real estate fraud perpetrators are also known to cover up illegal actions by implicating unsuspecting, law-abiding professionals.
You cannot underestimate the importance of working with an experienced criminal defense attorney. Note that the burden of proof shifts to the defense whenever you table an argument. A reliable lawyer will conduct investigations and collect evidence that can help support an assertion of innocence.
Irrespective of how bad your charges sound, a competent attorney can help protect your rights and best interests. The professional understands the complexities of proving you committed real estate fraud beyond a reasonable doubt. Sometimes, the best defense tactic is limiting a defendant’s liability exposure when under investigation.
Find a Real Estate Fraud Attorney Near Me
If you are under investigation for real estate fraud in Anaheim, it is crucial to contact a skilled attorney immediately. The expert will help you understand the charges you face, the evidence against you, the potential penalties for an offense, and the right tactics to achieve an acquittal or the best plea bargain. At the California Criminal Lawyer Group, we know how the prosecution thinks and can help devise strong defense tactics. Contact us at 714-766-0965 for a 100% free and confidential consultation. Let us help you fight allegations that can potentially harm your personal and professional life.