So just what can you do to protect yourself and your money? Check out this list of five clever tips to help you minimise the possibility of losing your money to property rental scams:
1) Find out with whom you are dealing
Fraudsters can pose as the owner or the real estate agent, sometimes even coming up with elaborate schemes to deceive prospective tenants. A rental fraud case in America involved a former agent who attempted to rent out several vacant properties and collect deposits without having any authority to do so.
Malaysia too has had its fair share of property frauds, most recently with scam artists pretending to be agents. The good news is that you can easily find out if the agent with whom you are dealing really is registered. Just run the agent’s Real Estate Negotiator (REN) number (for free!) on the Negotiator Search page of the Board of Valuers, Appraisers, and Estate Agents of Malaysia’s official website.
To find out about the owner, simply conduct a quick internet search to look for potential red flags. You could also perform a bankruptcy search that will further confirm if the property for rent under his or her name is in foreclosure. The process is a rather simple one which can be completed online through the Malaysian Department of Insolvency’s official website for a small fee. Another method is via over-the-counter transaction in Headquarters Putrajaya, where a small fee of RM10.00 is payable via cash. Done this way, the bankruptcy search results can generally be received within 15 minutes.
2) Ask if a land title search has been done
A land title is a document that holds ownership information for land or any building constructed upon it, not to be mistaken with what some sites use the term ‘Land Title’ for when referring to the property’s residential or commercial title.
Thus, running a title search on your selected property is an important part of confirming ownership and title status as well as procuring more accurate details on the property.
Even though it is common practice to perform this search when owners mean to sell, not all agencies will conduct one for rental properties. It’s alright to ask for specifics and even proof of documentation, especially if the tenancy deal appears too good to be true.
If you are liaising directly with the owner, do run a title search yourself at the corresponding Land Office but do not be alarmed if the registry does not have one on record. Properties without individual titles (still under the master title) may not appear on the Land Office registry for the same reason or could be in the process of registration. The next step here would be to request other proofs of ownership such as a deed or Sale and Purchase Agreement.
3) Meet the owner in person
Note that sometimes, owners prefer potential tenants to work directly with an appointed agent – this is still acceptable provided that the agent is registered or works as a negotiator within a trusted agency.
However, if you have never met the owner or agent in person, do not attempt to send money unless you are able to verify the identity of the owner and the authenticity of the rental agreement. Landlords that you have never met, rarely request for money to be sent online without having a reputable agent to validate the deal and act as a physical go-between.
If in the case of overseas-based landlords, genuine ones often engage a property management agency or real estate agent to manage tenancies. Dealing directly with an overseas-based landlord is rather risky, especially when everything is done online.
In a recent KL rental scam, a fraudulent owner, supposedly a British expat deceitfully requested potential tenants to transfer deposits to a notable property website in Malaysia. However, the banking details appeared to send the money directly into the account of an unknown individual instead of the property website listed.
Thus, if there is you are unable to validate the identity of the owner or tenancy promised, carefully consider before transferring any funds.
4) Cross-reference contract information
Carefully read the Tenancy Agreement and get assistance if you aren’t fluent in legalese to ensure that the contract is on the up and up. Check that names, identity card numbers and addresses match exactly on the contract especially on the ‘First Schedule’ or ‘Schedule 1’ as it is commonly referred and where summarised details are to be found. To do this, you’ll need to request a copy of the owner’s identity card.
In addition, do confirm that the bank account details provided correspond to that of the landlord. If they do not match however, do seek clarification if the property has more than one owner, otherwise, this could be a cause for concern.
5) Avoid making cash payments or instant transfers
Be sure to issue cheques for deposits or if that option is not available to you, do buy a bank draft, make a copy and hold on to the receipt. Cash payments are difficult to verify or stop if need be, whereas instant bank transfers, while traceable, may not be retractable depending on your mode of transfer.
If a registered real estate agent is involved, insist that any monetary handover be done in the agency office. This would include paying the deposit as well as when signing the Tenancy Agreement.
Whether it’s your first time renting or even if you’ve done it before, it’s completely understandable to feel overwhelmed when it comes to parting with hard-earned money. So instead of enduring unnecessary stress and worry, just get in front of your fears and perform these essential checks.
It may seem like a lot of work and therefore you might just choose to bite your tongue and trust that all will be alright, but it is in your best interest to be diligent not just for the sake of the money but to avoid unnecessary hassle in the future.
Definitely the number of scammers are increasing these days especially with the internet savvy era, it makes it so much easier for them. Renters and buyers just have to be vigilant and manage it wisely to avoid being scammed.