An insight on conmen and their sweet deals

The golden rule of any property market is that if something is too good to be true, it probably is. For example, an advertisement for a furnished two-bedroom apartment in Dubai Marina with annual rent as low as Dh60,000 should be enough to sound an alarm. But some people still fall for such schemes. In one instance, a cunning agent was able to lease a property to multiple tenants before disappearing with the payments.

There are also scammers whose modus operandi is to lease a property and then illegally present themselves as the unit’s owner to prospective tenants. In an oft-repeated refrain, the conman receives advance payments from the victim and then runs away without a trace, leaving the real landlord with one or more new tenants and a big mess.

Nearly cheated

Chris (name changed), a landlord, approached PW to talk about a recent incident where he was nearly defrauded by an unregistered real estate agency. Chris said he listed his one-bedroom apartment on a property website and received numerous offers and requests for viewings. The annual rent was Dh100,000, payable in one cheque.

A real estate agency approached him and offered to lease the property to one of its clients. The catch: payment had to be made in four cheques. Chris, however, insisted on a single cheque, so the agency offered Dh5,000 on top of the list price, but maintained that it had to pay in four instalments as a matter of company policy. In addition, the agency would also take care of cleaning, painting and maintaining the property.

It was the best deal on the table, but before signing the agreement Chris had the good sense to review the agency’s documents and ask friends for advice. One of them had been a victim of such a scheme, and he promptly advised Chris not to push through with the offer. Upon inspecting the agency’s documents, PW learned that it did not have the licence to manage and lease properties on behalf of landlords, as that would require a bank guarantee of Dh5 million.

For lack of due diligence

A similar case happened late last year in Dubai, although the victim, who also spoke to PW about his experience, regretted not researching properly before signing the agreement. Viren (last name withheld), an Indian expat working in the advertising industry, was recently handed the keys to his new apartment, which he immediately put up for rent.

“When I got the property after many delays, I was eager to rent it out to generate additional income and help in paying the mortgage,” he says. “A real estate agency offered me a good price for four cheques. I welcomed the opportunity and went ahead with the contract. My first two cheques cleared, however, the third [went back] due to a signature mismatch. I contacted the company for a replacement cheque, but it seemed to have closed down.

“I approached the Real Estate Regulatory Agency [Rera], which told me to send a registered notice to the company. As [it] was closed the notice came back.

“Obviously there is a tenant living in my apartment. I reached out to him, but since he paid in one cheque, he could not be of much help.

“I could pursue the matter in the courts, but the additional expenses and hassle are not worth the money. Hence I decided to wait out the remaining tenancy period and get a new deal with the tenant on expiry of the contract.

“I think the government should publish the names of blacklisted companies to warn people.”

Sarit Thomas, Senior Associate at law firm Taylor Wessing, says property owners must be vigilant against such scams. “The Dubai Land Department and Rera have sought to regulate the market and ensure that all parties are aware of their rights as much as possible. But individuals have to do due diligence and ensure that they are comfortable with the transaction and terms proposed, including their obligations.”

Larry (name changed), another landlord in Dubai, had a similar experience last year with his two-bedroom apartment. “The real estate agency rented it from me and then released it to a tenant,” he says. “I got three cheques. The first cleared, but the second bounced. By then many others had been duped, the company had closed and the people operating [it] had fled the country.

“I am now looking for a solution. I have registered my complaint with Rera, hired a lawyer and filed a case. It’s so much trouble. In addition to the loss of rent, I have spent Dh11,000 [on the case] and still don’t know what will come out of it.”

This is how it works...

Experts tell PW that the scam works on the principle of cash-flow management. An agency will rent an apartment from a landlord in four cheques and then lease it for a similar or lesser amount in one or two cheques. In some cases, these agencies are able to transact several properties at a time.

If one is able to transact 500 properties, assuming an average rent of Dh200,000 for each property payable in two cheques, the scheming company would be able to generate around Dh100 million with an outflow of Dh25 million per quarter. After cashing the second cheque and paying the second instalment to landlords, the fraud-sters can leave the country with around Dh50 million.


Source: Ashutosh Gupta, Special to Property Weekly


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