Real estate
5 min read

Property fraud risks: what are the consequences?

What penalties have been introduced to combat document fraud? We take a closer look in this article.

According to Lagenceblue67% of tenants falsify their tenancy file in order to find accommodation, a high statistic that testifies to the abundance of document fraud in the property sector. So what are the risks and consequences of property fraud today? And how is the government combating this scourge? Find out in this article! 

Real estate fraud risks: a few reminders 

Real estate fraud occurs when deceptive means are used to gain an advantage from a transaction. 

With inflation, the most common type of real estate fraud is fraud in the rental file. The idea is simple: applicants falsify their documents (payslips, tax returns, etc.) to obtain a ideal dossier for estate agents. They can then get a flat much more easily and quickly. 

To find out more, read our article on the subject 👇

Real estate fraud: definition and issues 

Although penalties have been introduced, they are still not enough of a deterrent. Let's take stock together. 

What are the penalties for property fraud? 

Fraudulent rental files: what are the risks for tenants? 

With rental accommodation becoming increasingly scarce in large towns and cities, applicants are tempted to falsify their applications in order to obtain a tenancy agreement. 

It has become virtually impossible to find accommodation without a stable job and sufficient income. As a result, applicants no longer hesitate to change their employment contract, pay slips or tax returns to improve their chances of finding a flat. 

However, according to the article 441-1 of the Criminal Codethe penalties for forgery and the use of forgeries are increased to 3 years of imprisonment and 45,000 euros fine

If the candidate is charged fraudThis penalty may be as high as 5 years' imprisonment and 375,000 euros fine

💡Did you know ?
It is important to note that falsifying a payslip or an employment contract can also result in fines. tensions with your employer. Altering your company's official documents could be frowned upon and jeopardise your professional relationship.

Providing false documents: what are the penalties for the owner?

In this property crisis, tenants are committing fraud in order to obtain a flat more easily, but it is also the owners who are falsifying documents in order to sell their property at a higher price.  

Today, sales are governed by the energy performance diagnosis (DPE). Its purpose is simple: toestimate a home's energy consumption to calculate its ecological impact. Goods are listed in alphabetical order, from the most environmentally friendly (letter A) to the least environmentally friendly (letter G). 

The ECD is mandatory for sales and rentals It must be carried out by the owner or lessor of the property. It is then included in the Technical Diagnostic File (DDT), which contains all the documents required for the sale! 

To prevent housing becoming unfit for habitation and energy consumption, the government now regulates the rental of certain properties. The following properties will no longer be available for rent: 

  • classified accommodation G from 2025,
  • classified accommodation F from 2028,
  • classified accommodation E from 2034.

To improve the value of their home, owners give it a higher energy rating. With a higher energy performance rating, the value of the property rises. 

However, this practice is reprehensible. In the event of a falsified label, the vendor or lessor may be required tocarry out work to achieve better energy performance. They can also be fined up to up to €1,500 if its diagnosis is not certified. 

👀 Good to know!
In the event of an erroneous DPE, the diagnostician is also liable to penalties: 
If the report contains an error, the diagnostician may owe damages and interest.
If the diagnostician practices without certificationit may incur a a fine of between €1,500 and €3,000 if he re-offends.
If it does not send the ECD to theFrench Environment and Energy Management Agency (ADEME)they may be ordered to pay a fine of 1,500 euros

Fraudulent notice to quit: what are the consequences for the landlord? 

Tenants are not the only people who try to defraud the property market. To recover their property more quickly and without waiting for any advance noticeWhen it comes to renting, landlords are often tempted to give their tenants notice without good reason. We'll explain! 

Today in France, only three reasons are valid To terminate a tenancy agreement, the landlord must give notice: 

  • For recovery 
  • For sale 
  • For legitimate and serious reason

To determine whether or not the reason given by the owner is fraudulent, here are a few points to bear in mind: 

  • The owner wants to sell his flat and has set a disproportionate price. In this case, the landlord may simply be trying to dissuade the tenant from using the property. right of pre-emption. The right of pre-emption is a legal protection that gives the tenant priority to buy the property if the owner decides to sell it. 
  • If the property remains unoccupied when the tenant leaves, the tenant may be given notice to vacate for fraudulent reasons. 

If the fraudulent notice is confirmed, the landlord is liable to a fine of up to 6,000 euros

What regulations apply to the estate agent profession? 

Fraud is rife in the property sector, both on the landlord's and tenant's side. In order to regulate this activity, estate agents are subject to certain obligations under the Hoguet Act no. 70-9 of 2 February 1970

Holding a professional card

According to Article 3 of the Hoguet Actthe estate agent is obliged to present a professional card to prove its ability to practise.

To obtain this card, you must demonstrate : 

  • Sa solvency 
  • Sound professional aptitude 
  • A absence of disability or a ban on practising 

Note that according to theArticle 14 of the Hoguet ActIf the estate agent fails to comply with these obligations, he or she is liable to 6 months' imprisonment and of 7,500 fine

In addition, if the estate agent receives sums of money from his customers during the period in which he is prohibited from practising, the penalty may be as follows extend to 2 years' imprisonment and 300,000 fine.

Displaying the price and surface area of the property

Estate agents are required to promote your fees in the event of sale and its commission in the case of rental. 

In addition, it must announce clearly state the price and surface area of the property it offers. 

In the event of a misleading advertisement, the estate agent is liable to 2 years of imprisonment and of 37,500 fineaccording to L. 121-1 of the French Consumer Code

How can we combat property fraud on a long-term basis? 

Are you an estate agent losing a lot of money through rental fraud? There are several tools you can use to combat document fraud

At Finovox, we have developed a SaaS solution, available via an API, that enables documents to be analysed to identify any alterations that have been made. How does it work? It uses several algorithms for consistency analysis, visual analysis and statistics and IT. 

As an estate agent, all you have to do is enter your candidates' documents into our solution. They are then analysed to find out whether the files are genuine or have been altered to obtain a rental. If the documents have been altered, we will give you an account of the falsified area and how the fraud was committed. 

With Finovox, you can examine all your documents, of all types and in all languages! Are you interested in this solution? Ask our experts for a demo! 

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