Always verify identity to protect both you and your clients

Registrants are required to verify that the parties in a transaction are who they say they are, in accordance with the Trust in Real Estate Services Act, 2002 (TRESA) and, more particularly, the Code of Ethics.

Identity theft occurs when a fraudster assumes a person’s identity using both public and private information. Since real estate is so valuable, it can be a prime target for sophisticated criminals. Once the fraudster has assumed a property owner’s identity, they can then attempt to sell or remortgage the owner’s property without the owner’s knowledge. This may involve misleading a registrant, a lawyer, or other professionals while carrying out the fraud.

You can verify an individual’s identity using a variety of methods, depending on the circumstances.

The most common method is to rely on government-issued photo identification. Confirm that the individual looks like the photo on the identification they present and that the age seems reasonable. Check the height or eye colour on a driver’s licence to make sure it matches.
If an individual is not physically present, you must verify the authenticity of a government-issued photo identification by using a technology that is capable of assessing the document’s authenticity. FINTRAC methods to verify identity outline several approaches to meeting these requirements.
There are various online ID checkers, including the Ontario Driver’s Licence Check system, where you can obtain information on the status of a driver’s licence number.
Some online document-signing software applications facilitate verification of identity based on government-issued photo identification or bank-based and electronic identification, which you can view, validate, and retain.
Confirm who the owner of the property is using the local land registry before engaging to sell the property.

Look for anything suspicious and ask questions

Be vigilant for any inconsistencies, such as spelling errors when the buyer or seller writes their name or email address, or other odd or unusual mistakes.

Ask for details that a homeowner would generally know, such as how old the furnace is, when the roof was last replaced, and details about renovations. Ask them to produce invoices for work done, utility and property tax bills, or other documents a homeowner would have.

Other concerns might arise if the homeowner appears to be looking for a quick sale and closing or an unusually low sale price or readiness to accept a low offer for no valid reason.

If you have any suspicions, ask qualifying questions, such as when the person bought the home and who their real estate agent was in the purchase. That information would be available if the home was listed through the MLS® the last time it was sold.

If they fail some of these small checks, do further investigation and insist on additional identification sources.

Training

Obligations for checking, verifying and record keeping of the identity of buyers and sellers are covered within the real estate education program and RECO’s mandatory continuing education (MCE) courses. More specifically, the FINTRAC course covers the following:

due diligence on client identification requirements
consequences for failing to verify a buyer’s or seller’s identification properly or for keeping incomplete records
registrant requirement to verify the authenticity of a government-issued photo identification document when an individual is not physically present by using a technology capable of assessing the document’s authenticity
retaining copies of the identification presented

Legal consequences

Registrants who fail to properly verify the identity of a client may face RECO disciplinary action or civil litigation by those affected by that failure. The maximum discipline fine for a registrant is $50,000, or they might also face suspension or revocation of their registration.

RECO will bring the full weight of the law to bear on any registrant involved in fraud and will cooperate with law enforcement in any criminal prosecution.