How Moscow’s rampant real estate fraud preys on sanity (literally)

Proof of sanity is just as essential as obtaining proof of purchase in Moscow’s fraud-prone real estate housing market.

Since Soviet-era laws historically favor homeowners, sellers can undo a home sale by claiming they were drunk or temporarily insane — a practice that’s become a mainstay for many fraudulent plots in the Moscow real estate market, according the New York Times.

In one scheme, homeowners and real estate agents would sell the house, pocket the payment and then claim the seller was temporarily insane and reclaim the property. Though buyers could sue to recoup their cash, the laws often act against them and the property itself remains with the seller.

As a result, a certificate of sanity from all parties has become buyers’ tool of choice to combat fraud that often uses claims of temporary insanity to steal money and property. In fact, in recent years, nearly all real estate transactions require certificates of sanity in order to move forward.

“This is self-defense,” said Moscow-based agent Mikhail Pak. “In Russia, fraud happens.” [NYT] — Erin Hudson