Real estate fraud / German banking

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Page modified: �roda, lipiec 13, 2011 03:15:42

Real estate fraud in the closer (criminal) sense is a Unterform of the fraud, with which real estates are sold to money investors consciously at a superelevated price.

In the broader sense real estate fraud (or the short form "Immobetrug") is used than the name of damaged investors for the complex "scrap iron real estate, structure selling and real estate financing".

The sales of too expensive real estates is assigned to the range of the grey capital market.

For the real estate fraud the following aspects were typical

Made too expensive real estate prices
Dubious distributing organizations
Completion by trustees and
Deception of the investor

Made too expensive real estate prices

With real estate fraud a selling concept comes to carries, which essentially consists of it, large, to acquire and recondition at as small an expenditure as possible usually renovation-needy residential complexes (so-called "brush reorganization"), in order to then sell these either as free-hold flats or closed real estate funds.

With the real estate fraud the buyers are cleared up not over the true value of the sold real estate, the purchase price do not divide themselves for the Erwerber not transparently in internal selling price in accordance with material, covered value and so-called hidden interior commissions.

The problem of the superelevated prices was still intensified by the purge of the real estate prices in the new Lands of the Federal Republic.

Dubious distributing organizations

The selling and sales take over so-called structure selling, which complete usually the business at home or on the job. As so-called door openers often serve friends, acquaintance, teammates or an unexpected telephone call (Kaltaquise). This proceeding is called in the iurisdiction real estate acquisition in an entry door situation, which is treated at present controversially in the German and European iurisdiction.

Completion by trustees

Is sealed the acquisition in form of a so-called order for management of affairs, which is authenticated with a notary and a trustee authorized to lock all contracts necessary for the acquisition of the real estate. The construction financing obtained in connection with the real estate acquisition must be signed however by the Erwerber, since otherwise the possibility could be opened to this of letting explain with judicially determined nullity of the business also the financing by borrowing for futile, procured by the trustee.

Deception of the investor

So-called structure selling developed a sales concept for these buildings, with which the tax austerity possibility is placed into the foreground. The real estate actually, becomes with the sales talks nearly a secondary matter. For the 90's scrap iron real estates are sold in such a way also to small earning population parts.

The location of such sold real estates (so-called scrap iron real estates) does not play a larger role. Frequently are they however hundreds far away from kilometers from the potential customer, in order to make to this more difficult a problem-free inspection.

As the further problem is to be called with the potential victims the few to missing experience in the dealing in real estate - which by the entry door situation is intensified -. Typical activities such as inspection, neutral market value estimation and estimate of the situation as well as insight into the land register entries are omitted. Likewise secondary opinions and own clarifications to the long-term financial loads.

Sales arguments

The customers were usually persuaded with the following standardized sales arguments to the purchase:

Tax benefits

Substantial sales argument was the promised tax saving.

To sell was important to rented free-hold flats because of the tax benefits by renting incomes. By the influence of the tenant organizations one renting connection waiting period of federally uniform 3 years (with special arrangements to lifelong) existed for the protection of the past tenants from internal requirement notices and speculators for existing leases. This made the sales at self users unattractive and promoted so the sales of dwellings at so-called capital investors.

Age precaution

Often the real estates were sold to inexperienced capital investors as a contribution to age precaution. By the detailed rents the objects should carry to a large extent, so that at the age a real estate free from debt would be present. A resale with profit (e.g. by a Boardinghouse) is "problem-free".

Key words were "increase in value without own capital funds" or "real value instead of monetary value".

Renting warranties

Usually (e.g. r a renting warranty was offered. Since in the substantially superelevated purchase price with conclusion of a deal the basis for it is already put that renting warranties do not correspond to the material attainable rent in accordance with local rent standard and therefore the renting guarantors go at the latest after one year into bankruptcy. Frequently the Erwerber pays, without recognizing this, even the own renting warranty already with conclusion of a contract totally or partly also. In other variants the renting warranty up to the impossibility of the transformation of the business contract is covered subsidized by the builder.

Those only in case of failure the renting warranty distrustfully becoming Erwerber tighten builders, selling and renting guarantors in the consequence very soon that except the banks, which financed the superelevated purchase prices nobody can be taken more in recourse, there usually officially in insolvency to rule or for other reasons are not seizable.

Full financing

As particularly salespromoting and trust-arousing usually the promise was rated that a considerable bank will finance the purchase to 100 %.

German banks financed, partly to very large extent, the housing purchases.

From where did the real estates

An important source was the new homeland scandal of the 80's. For example the NH Lower Saxony sold as part of a stabilization concept of the fastened society approx. 8200 dwellings to a housing fortune company in Hanover to sell with the goal these existence to the tenants over of trade union getting thing developed sales concept dwellings in tenant hand.

The dwellings concerned could be sold not completely after this sales concept to the tenants, why scarcely half of these ehm. NH dwellings over structure selling to so-called capital investors were sold, to which there are numerous reports in the media and/or law cases.

At the property market renovation-needy residential complexes arrive again and again, e.g. cities separate according to expiration of the societal restriction from disk's buildings. Beginning of the 90's arrived also a majority of the disk's buildings established in the GDR at the housing market.

Consequences

In Germany there are thousands of real estate fraud victims, the consumer protection goes out according to careful estimations of 300.000 victims. Thousands of families stand at present before the financial ruin. Due to the financial ruin many had the consumer insolvency procedure. There are also suicides.

The billions-worth burst real estate credits, which no value faces, were worth-corrected by the banks debited to their yields. These adjustments of value led alone with the HypoVereinsbank in the year 1998 to special depreciations of 3,5 billion DM.

These "distressed" credits are partly resold by the banks over the capital market with high anticipated payments to interested companies.