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    Questionable Real Estate Promotions Continue In Calgary

    As concerns about fraud and various shenanigans continue in the real estate market in Calgary, one cannot help notice the various organizations flooding Calgary trying to get people either to invest directly in real estate, or take a “course” on how to make money in real estate. Also, the current flood of ads in local newspapers offering very low down payment type properties raises red flags for us.

    Rainbow Investigations points out the sale of real estate in Alberta is relatively poorly regulated and this provides glorious opportunities for less than honourable types to take advantage of investors, and / or others who would not normally be investors, to be hooked into fraud schemes due to a lack of knowledge of real estate law or a lack of control of the process. This is very much "buyers beware real estate" out there now.

    Many advertisements have now flooded the radio and TV markets in Calgary for investors to invest in “real estate trusts”. While this type of investment, (where a group of investors buy shares in a single property managed by a real estate trust company), is usually legitimate, potential investors should check out that these types of properties are in fact managed by legitimate people, that the trust organization is legitimate, and the monies invested should go into a trust bank account at a reputable law firm.

    Rainbow Investigations can provide background checks to make sure these real estate trusts are properly registered, that the people are who they say there are, that there is no history of litigation or other real estate complaints pending with these organizations, and that the invested monies are going to legitimate places. Our cost for such a service is in the area of $500.

    A number of full page ads in the various newspapers of Calgary have shown up recently where a company, often from the U.S., is coming to Calgary to offer courses in real estate investing. Typically, these promotions are handled by having participants attend a seminear in a hotel ballroom, where a relatively high profile speaker than tries to sell participants to sign up for a weekend course on how it’s done. The subsequent course then is in the $3000-$4000 range. Usually, there is information on the internet about the content of these courses from people who have taken them in other cities.

    While there is nothing wrong with learning how to invest in real estate, and make money at it, many times these U.S. promoters are basing their concepts on U.S. type rules for land title information, property listing information, and at least in one case, information concerning the disposition of estates. Alberta has the tightest rules anywhere in North America on privacy laws, (who to better know that than a PI firm!), and what is public information in the U.S. is probably almost completely unavailable information in Alberta.

    So many of these U.S. promotions may be having seminears and selling courses on real estate investing concepts that are simply not practical or even possible to be acted on here in Alberta like they are in the U.S. Yet, at no time, would you ever see anybody in from our Service Alberta, or any other consumer protection group attend one of these seminears, to ensure that speakers provide an accurate portrayal of what is practical and legal to undertake in Alberta.

    With respect to the numerous ads in the weekend Calgary newspapers about low down payment/assumable/foreclosure type real estate, which supposedly can be bought at currently low prices, while there may be a few deals out there; it is advisable that investors check out these promotions before signing any property transfer papers.

    The most noticeable red flags that one should always be aware of with these kinds of sales include:

    • Avoid any type of inducement, or reward, or prize for getting involved in the sale (ie being paid $5,000 for taking on a property – it usually is not worth it in the long run);

    • Avoid any type of situation where there are soft commitments by the seller to “pass the property on after a few months”, or “manage the property and look after everything, etc.” Once a property is in your name, you are the responsible party for all aspects of the property; most of the time the seller is gone once the property is out of his/her name;

    • Avoid situations on this kind of sale where the seller arranges a law firm to act for both parties. It is advisable to have your own law firm do your side of the conveying, and you should get to meet your law firm’s actual real estate lawyer during the process;

    • You may wish to have someone do historical land title searches on the property to see the history of transfers, and become aware of “flipped” properties which become red flags; also the history of caveats placed against the title of the real estate may become important;

    • Make sure the realtor is licensed with the Alberta Real Estate Council;

    • Avoid situations where the seller arranges the mortgage on your behalf for you; you should be speaking directly to the mortgagor and or the broker so you know what financial qualifications they have on your behalf to make their lending decisions. This area, in our experience, is particularly bad in Calgary right now, as mortgage brokers are largely unregulated in Alberta, and banks don’t seem to be questioning them in any meaningful way concerning qualifying financial information when a broker tries to sell a mortgage proposal out to the banks.

    Again Rainbow Investigations, and some very honourable real estate and litigation lawyers in Calgary are good at checking out that a potential deal here is legitimate.

    The $500-$700 one could spend doing some background research prior to signing any of these deals may literally save one thousands upon tens of thousands of dollars later if this is found to be a fraudulent promotion.

    Unfortunately there are people in Calgary, (and not just a few), who didn’t do their homework and are paying for it now.

    Date of Story: Friday, November 07, 2008
    Story Posted By: Ron Reinhold
    Source: Ron Reinhold

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