Real Estate Fraud Laws in California
Real estate fraud occurs when someone commits fraud in connection with the purchase, sale, rental, or financing of real estate property. It is a crime under state and federal laws and can result in jail or prison sentences.
A party can commit this fraud at several different stages of a given real estate transaction, including the appraisal, closing, and foreclosure proceedings.
Many individuals must be aware of the severe implications when applying for a loan, securing a mortgage, or refinancing a home. Any material misrepresentation in these processes, known as mortgage fraud, is a grave violation under California Penal Code Section 532f and can lead to prosecution in Los Angeles.
Simply put, real estate fraud in California occurs when an individual commits a fraud crime involving the purchase, sale, or financing of real estate property.
A prosecutor could file this type of fraud crime under California state and federal laws. The penalties for a conviction are severe, including substantial fines, lengthy jail time, and the obligation to make restitution, underscoring the gravity of the situation.
“real estate fraud” includes illegal activities directly connected to home or business mortgages, rental properties, flipping properties, straw buyer schemes, and predatory loans.
Real estate fraud can occur at several points in a transaction, such as foreclosure proceedings, appraisal, or closing.
While the state of California does not have one specific statute for real estate fraud charges, there are a wide range of related laws used by prosecutors, such as:
- Penal Code 532 PC – theft by pretenses,
- Penal Code 115 PC – filing forged documents,
- Penal Code 487 PC – grand theft,
- Civil Code 2945.4 – foreclosure fraud.
Most real estate charges are 'wobblers,' a term used in California law to describe offenses that can be charged as either a misdemeanor or felony, depending on the circumstances and the defendant's criminal history. This means that the severity of the charge and potential penalties can vary greatly, making it crucial to have a strong legal defense.
What is Real Estate Fraud in California?
Fraud in real estate happens after somebody commits a dishonest act that financially benefits them during a real estate transaction.
Real estate fraud is a complex and broad term encompassing a range of illegal activities related to property transactions, from mortgage fraud to foreclosure fraud, rent skimming, straw buyer schemes, and predatory lending. This complexity underscores the need for professional legal guidance in such cases.
- Mortgage fraud, such as equity skimming and unlawfully getting a mortgage loan with false information or fake identification;
- Foreclosure fraud is a standard unlawful scheme that takes advantage of individuals who are facing property foreclosure;
- Rent skimming is another common illegal act when somebody embezzles tenants' rent money, who are then evicted for not paying rent;
- Straw buyer schemes are when someone purchases a home for another person because they were not qualified, such as bad credit;
- Predatory lending occurs when a mortgage broker obtains a home loan by charging excessive and unnecessary fees to pad their commissions.
Other forms of real estate fraud include property flipping, filing forged documents, and elder fraud, a fraudulent real estate scheme that takes advantage of elderly victims.
Providing False Information
When you lie on those documents, it's easy for the government or prosecutors to prove the case against you because you have put it in writing and signed it. You have often had it notarized under penalty of perjury and lied.
The biggest thing that bothers me about these mortgage fraud cases in Los Angeles, California, is that it is not necessarily the fault of the defendant charged with mortgage fraud. The company or the bank helping you with the loan often encourages you to sign these documents and put certain things in there, which can complicate the legal situation.
They're trying to protect themselves and get so much documentation that you have all these assets, and you can pay the loan back that they encourage you to commit mortgage fraud. They encourage you to say and sign things, but the reality is they aren't the ones in trouble when things go awry, and you're suddenly charged with mortgage fraud.
They'll say we told them to tell the truth. Of course, they'll protect themselves, so you have to make sure when you fill out these documents that you do so honestly and entirely because if you don't, you'll be subject to a big problem.
The reality, though, is that if you're reading this post, you're probably charged with mortgage fraud, and it's too late. You've already filled out the documents. The prosecutors are people, too. They live in society, and they know that these mortgage companies and loan people will say and do anything they can to get these loans effectuated.
In that case, you will be in a much better position to avoid a mortgage fraud conviction in Los Angeles and either get the case dismissed or get a lesser charge—maybe some diversionary problem, such as a pretrial diversion program or a plea bargain that could result in a reduced sentence.
California Laws for Real Estate Fraud
As stated above, California has different laws for real estate fraud charges depending on the details of the case, including:
Grand Theft Penal Code 487 PC is used when somebody is alleged to have committed fraud on property with a value exceeding $950. PC 487 is frequently used in mortgage fraud allegations connected to theft by pretenses. A conviction for grand theft could result in either jail or state prison for up to one year for a misdemeanor and three years for a felony.
Filing Forged Documents Penal Code 115 PC is used to file charges against somebody for submitting false or forged real estate documents connected to property ownership or forged mortgage loan contracts to a government office. PC 115 is always a felony punishable by up to three years in jail and a fine of up to $10,000.
Rent Skimming Civil Code 890 is used by prosecutors to charge someone in a situation where they rent out a home they are pretending to live in during the first year of the mortgage and don't apply their rent towards the cost of the mortgage. This crime can also occur when an individual falsely claims they own a property and then rents it to someone.
Foreclosure Fraud Civil Code 2945.4 is used in various situations, such as someone claiming to help a homeowner but charging them excessive fees or attempting to gain an interest in a foreclosed property. Foreclosure fraud is a wobbler that can be charged as a misdemeanor or felony with the same penalties as grand theft.
Real estate fraud could sometimes escalate to federal criminal charges because it sometimes involves federally insured banks, adding another layer of complexity and severity to the situation, further complicating the legal landscape.
What Factors Are Prosecutors Looking At?
Real estate fraud is rampant throughout Los Angeles County now. Over a 30-year career, I've handled hundreds of cases defending my clients. Prosecutors are aggressive in these cases, and they will use all the resources at their disposal to secure a conviction.
Real estate fraud can involve millions of dollars, somebody's home or business, and other charges, like perjury and other fraudulent-related offenses, that can put you behind the eight ball if you get convicted.
And absolutely, you're facing prison and jail if you're charged with real estate fraud.
The types of things that prosecutors are going to look at when deciding to try to send you to jail or prison are:
- how many victims were involved?
- how much money was involved?
- what does your criminal record look like?
- what sort of sophistication is involved with the real estate fraud allegations?
These are the things that we need to focus on. First and foremost, do they have the evidence to prove that you were involved in any real estate fraud, or is it a weak case against you?
Defending Real Estate Fraud Charges
If we can determine that it's a weak case and they can't prove the case against you, you may well have a defense. But, if they've got the evidence, let's not lie to each other.
Let's not do what many of my brethren and their employees do when you call them on the internet: paint a rosy picture of other cases they've handled when they know very little about your case.
If the authorities have the evidence against you, you won't be able to win the case. Accept that and move forward. If, on the other hand, you're innocent and didn't commit the crime or are not involved with real estate fraud, you've come to the right place because I've done over 250 jury trials.
I know how to fight cases, but we first must evaluate whether they have a good case against us. If they do, let's handle the case right from the beginning, set up our game plan, and give you an idea of what you're facing.
Let me give you an idea of what you can do to help me regarding a real estate fraud situation. For example, if you are accused and the authorities can prove that you stole thousands of dollars worth of real estate, you need to figure out how to make that better from the other person's perspective.
If we can do that, we have a chance to avoid a prison sentence for you and some of the dire consequences of a real estate fraud conviction.
Fighting Charges vs Mitigation
So, the first thing we need to do is figure out how we're going to handle the real estate fraud case — whether we're going to:
- fight the charges through the criminal court process or
- mitigate it through negotiation with the prosecutor and
- the next thing we need to do is figure out what steps need to be taken and
- what type of road map do we need to get you the best possible result?
That's different in every case because your history differs from other people's; what you did is different, as is the amount of loss and sophistication involved. Judges and prosecutors consider these factors.
Evaluation of the Game Plan for Best Result
So, when we sit down, we'll say, "I'm going to tell you, here's what they're looking at."
Here's what they're concerned about, and now, here are some things we can do to make a difference. Can you do these things?
We will evaluate whether you can do these things and whether or not doing them is the best move for you and will get you the best result.
So, the first step is to pick up the phone. Ask for a meeting with Ron Hedding if you've got a real estate fraud-related offense in Los Angeles.
We'll sit down and meet. I'll answer all of your questions. I'll give you an idea of what you're facing, and then finally, and probably most importantly, I'll give you an idea of how we can end up with the best result for you, such as:
- How we can protect your future;
- How we can protect your freedom;
- How we can keep you out of jail;
- How we can keep you out of prison; and
- How can we get you the best possible result based on your circumstances?
Hedding Law Firm is in Los Angeles County at 16000 Ventura Blvd #1208, Encino. CA 91436.
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