Real Estate Council of Alberta Fundamentals Practice Exam

What characterizes non-occupancy fraud in real estate?

1. Intentionally misleading lenders about purchase intentions

2. Claiming ownership of properties without actually buying them

3. Using properties for commercial purposes while claiming they are for personal use

4. Applying for loans with falsified income records

The correct answer is: Intentionally misleading lenders about purchase intentions

Non-occupancy fraud in real estate primarily involves intentionally misleading lenders about the intended use of a property. This type of fraud often occurs when an individual claims they will occupy the property as their primary residence, while in reality, they may plan to rent it out or use it for investment purposes. This misrepresentation is significant because lenders typically offer more favorable loan terms to owner-occupants compared to investors. By providing false information about their purchase intentions, the borrower aims to benefit from these better terms, which constitutes a violation of lending regulations and ethical standards in real estate transactions. Though other choices highlight different forms of fraud or misrepresentation in real estate, they do not specifically align with the concept of non-occupancy fraud. Options regarding ownership claims or falsified income records pertain to different fraudulent schemes within real estate, without the direct focus on misrepresenting occupancy intentions.