In recent weeks, the real estate industry has witnessed a concerning rise in fraudulent activities, with criminals posing as property owners and attempting to deceive real estate professionals. District Attorney Dan Dow of San Luis Obispo County is calling for heightened vigilance among real estate professionals to combat this growing scam, particularly in relation to vacant properties. This blog post aims to shed light on the alarming trend, explain how the scheme works, highlight methods of discovery, and provide preventive measures to avoid falling victim to this criminal activity.
The Rising Threat of Real Estate Fraud:
Law enforcement agencies across various California counties have reported a significant surge in real estate fraud cases associated with the sale of unencumbered properties and vacant land. Criminals have devised a scheme wherein they assume the identity of property owners and engage in negotiations with real estate agents for the sale of properties they do not possess the title to.
Understanding the Scheme
The fraudulent scheme involves several steps designed to deceive real estate professionals and exploit their trust. Firstly, the criminal scours public records to identify properties that are lien-free and vacant. These properties, often including vacant lots or rentals, become the targets for their fraudulent activities. The criminal then contacts a real estate agent, masquerading as the property owner, and requests the property to be listed below market value to attract immediate interest. They also emphasize the preference for a cash buyer and hastily accept an offer. To avoid in-person interactions and raise further suspicions, the criminal insists on remote notary signing. In this process, the criminal or a co-conspirator impersonates the notary, providing falsified documents to the title company or closing attorney. Consequently, the closing proceeds are unknowingly transferred to the criminal, completing their fraudulent act.
Discovery and Impact
The discovery of such fraudulent transactions often occurs during the recording of transfer documents with the relevant county. However, this scheme has disproportionately affected vulnerable individuals, such as the elderly and foreign property owners, who may lack automatic means of notification. The burden of verification, therefore, falls on the real estate and title companies to detect and prevent these fraudulent activities.
To protect themselves and their clients from falling victim to real estate fraud, real estate professionals should adopt the following preventive measures:
1. Conduct Thorough Research: Perform open-source research to verify the identity of the purported seller, seeking recent photographs and other relevant information.
2. Request In-person or Virtual Meetings: Insist on meeting the seller in person or through virtual means, and verify their identity using government-issued identification.
3. Be Alert to Unusual Offers: Exercise caution when a seller accepts an offer well below market value, especially when they emphasize cash payments and a speedy closing process.
4. Utilize Trusted Professionals: Engage reputable title companies and attorneys for the exchange of closing documents and funds, ensuring their reliability and trustworthiness.
Real estate professionals must remain vigilant in the face of increasing real estate fraud perpetrated by criminals posing as property owners, particularly in relation to vacant properties. By familiarizing themselves with the modus operandi of these fraudulent schemes and implementing preventive measures, real estate professionals can protect themselves, their clients, and the integrity of the industry as a whole. Collaborative efforts between law enforcement, real estate professionals, and property owners are crucial to combating this insidious form of criminal activity and ensuring a secure real estate market for all.