Real Estate Scams
🏚️ Common Types of Real Estate Scams:
Fake Property Ownership – Selling property one does not own using forged documents.
Multiple Sale of the Same Property – Selling the same property to multiple buyers.
Misrepresentation by Builders/Developers – Promising amenities or approvals that are not delivered.
Illegal Land Acquisition – Selling land that is government-owned or part of protected land.
Title Fraud – Forging the title documents and mortgaging/selling the property.
📚 Case Laws on Real Estate Scams
1. Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana (2011) 1 SCC 656 – India
❖ Facts:
In this case, the issue was the widespread practice of selling real estate through General Power of Attorney (GPA), Agreement to Sell, and Will – instead of registered sale deeds.
❖ Issue:
Whether transfer of property through GPA/Agreement to Sell/Wills constitutes valid conveyance.
❖ Judgment:
The Supreme Court held that such transactions do not confer ownership and are not legal substitutes for a registered sale deed. The court criticized these methods as tools for evading stamp duty and often being used in fraudulent transfers.
❖ Significance:
This case curbed fraudulent practices by clearly stating that only registered sale deeds can convey legal ownership, thereby protecting buyers from fake transfers via GPA.
2. State of Andhra Pradesh v. P. Narayana (AIR 1971 SC 1797) – India
❖ Facts:
A group of individuals, in collusion with revenue officials, forged land ownership documents and sold government land to unsuspecting buyers.
❖ Issue:
Whether government officials and private parties could be held liable for conspiracy and fraud.
❖ Judgment:
The Supreme Court upheld convictions, holding that all parties acted in conspiracy to commit land fraud. Forgery of land records and illegal sales were punishable under criminal conspiracy, cheating, and forgery sections of the Indian Penal Code.
❖ Significance:
It reinforced that even government officials can be prosecuted for colluding in real estate fraud.
3. Michael H. Roman v. United States (2007) – U.S. Case
❖ Facts:
Roman was involved in a complex real estate scam where he posed as a property owner and used forged documents to sell or mortgage properties he did not own.
❖ Issue:
Whether the impersonation and use of fake documents amounted to wire fraud, mail fraud, and aggravated identity theft.
❖ Judgment:
Roman was convicted under federal laws for multiple counts of fraud and identity theft. The court emphasized the use of false title documents and fraudulent notary seals to deceive buyers and lenders.
❖ Significance:
Highlighted the vulnerability of digital property records and the use of identity theft in real estate crimes.
4. Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 – India
❖ Facts:
Balbir Singh was allotted a flat by the GDA, which was later found to have been allotted to multiple buyers due to corruption and mismanagement.
❖ Issue:
Was the buyer entitled to compensation for harassment and deficiency in service?
❖ Judgment:
The Supreme Court ruled in favor of Balbir Singh, directing compensation under consumer protection laws. The GDA was found guilty of deficiency of service and misrepresentation.
❖ Significance:
Set a precedent that government authorities and developers can be held liable under consumer law for real estate fraud.
5. R. v. Cornelius (2012 EWCA Crim 500) – United Kingdom
❖ Facts:
Cornelius impersonated property owners and attempted to sell their properties using forged documents and fake ID. He successfully completed one sale before being caught.
❖ Issue:
Was he guilty of fraud by false representation under the UK’s Fraud Act 2006?
❖ Judgment:
The Court of Appeal upheld his conviction, highlighting that even one act of impersonation with intent to sell property is a serious crime under real estate fraud.
❖ Significance:
This case is a textbook example of title fraud and impersonation, which are common in real estate scams globally.
⚖️ Legal Provisions Commonly Invoked:
India (IPC & allied laws):
Section 420 IPC – Cheating and dishonestly inducing delivery of property
Section 467, 468, 471 IPC – Forgery and use of forged documents
Section 120B IPC – Criminal conspiracy
Consumer Protection Act – For cases involving builders and authorities
Transfer of Property Act, 1882
Registration Act, 1908
UK & US:
Fraud Act 2006 (UK)
Wire and Mail Fraud statutes (US)
Identity Theft and Assumption Deterrence Act (US)
📌 Conclusion
Real estate scams are multi-faceted and often involve both civil wrongs and criminal acts. The judiciary, across jurisdictions, has taken a firm stance against such fraudulent activities, recognizing the need to protect property buyers from legal and financial harm. Courts have consistently emphasized the need for due diligence, proper documentation, and legal compliance in property transactions.
RELATED Blog
0 comments