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By Lisa A. Tyler
National Escrow Administrator

Real estate scams are on the rise. Property owners of vacant lots or homes which are not their primary residence are the targets. The scheme works like this, a fraudster identifies a property by looking for vacant lots or non-owner-occupied homes (that are usually vacant).

The home is listed for sale on a popular website or a real estate agent is contacted to list the property for sale or an application for a loan is made in the owner’s name. The property is either listed below market value to ensure a fast sale, or the imposter obtains a loan and absconds with the loan proceeds. The tips in this newsletter are intended to be shared. Forward the article titled “PROPERTY owners beware!” to real estate agents, property owners and buyers. 

Consumers are receiving overnight deliveries with counterfeit checks that appear to be issued by a title company. Some of the consumers are told they have been hired by a company that has accessed their posting of a resume on a job recruiting site. The purpose of the counterfeit check is to convince the consumer to deposit the check and send a portion of it to the “hiring” company to purchase equipment they will need to perform their new job or to pay their recruitment fee. 

Of course, the payee is none other than the fraudster who wants to abscond with the consumer’s money before it is discovered the check they deposited was counterfeit. Other fraudsters are using the “SECRET shopper” tactic to dupe consumers. Be sure to read the article and become familiar with these schemes. 

Last month, we provided an overview of how to complete IRS Form 8300. However, there is one box found on the form we did not cover. There may be situations where the settlement agent is suspicious about the principal or other parties to a real estate transaction. Suspicious transactions may include: 

• The person with whom they are conducting business is attempting to cause the Form 8300 not to be filed,
• The settlement agent is asked or pressured to file a false or incomplete form,
• There is an indication a party is attempting to launder funds.

Settlement agents may voluntarily report a suspicious transaction by marking box 1b on Form 8300. A suspicious form may be filed even if the “cash” received from any one remitter is less than $10,000. Voluntarily filing Form 8300 does not require notification to the party. 

Settlement agents who are suspicious about a transaction should contact their management for assistance. Read “REVIEW of ‘cash’ reporting” for one last quiz on what we have learned throughout the year.

The Fidelity National Title Group works very hard to help prevent fraud from occurring. There are some steps vacant land and non-owner-occupied property owners can take to protect themselves:

• Keep your mailing address current: This is the fastest and easiest way for someone to contact you about your property. Be sure the mailing address where the tax bill is sent is current by contacting the appropriate municipality who maintains those records. 
• Respond: Owners who receive a letter from a title or escrow company about an impending real estate transaction need to respond. Do not ignore the letter even if you are in the middle of a real estate transaction. By responding, the title or escrow company knows whether they should continue to process the transaction or not. 
• Know your neighbors: Be sure the neighbors surrounding the property know how to contact you. Befriend them. They can alert you should they see a for sale sign go up or anyone walking around your property. 
• Register for notifications: If available, register for notifications from the county where the property is located. Many states and counties now offer property owners the ability to receive notifications should documents record related to their property. Each county has their own version of notification; but where it is available, the county will generally send you a notification should a document record affecting the property you own. 
• Do not assume everyone involved is a part of the scam: There are many victims in this type of crime. Real estate agents spend their time and pay up-front costs to list a property for sale. Buyers invest in their due diligence when considering buying a property. Title and escrow companies incur costs when they receive and deposit earnest money and overnight letters to the property owner’s address (which includes the staff to perform these tasks). They too can be duped by the imposter. 

Debunking the Myths

A title or escrow company cannot simply flag your property for potential scams. This is why it is urgent that you timely respond to inquiries from title, escrow or real estate companies. Should you find out your property is being marketed for sale by an imposter, go to the source. 

Reach out as soon as possible to the real estate agent or website to notify them you are the true property owner, and your property is not for sale. Request a withdraw of the listing or ad from the site. 

How can Buyers Protect Themselves? 

Always purchase title insurance. Title insurance provides coverage over many items affecting real property, including fraud and forgery; subject to the exceptions and exclusions described in the title policy. Remember: title insurance provides coverage for issues occurring before the date of the policy. 

The Consequences 

These scams will likely result in changes in how real estate transactions are processed. The next time you purchase or refinance a property, do not be surprised if you experience additional steps to prove your identity: such as the use of I.D. authentication software or virtual meetings with the settlement agent to prove your identity, as well as a requirement to use the notary selected by the title or escrow company. 

Additional Resources 

This scam is widespread and garnering nationwide attention. For additional information, refer to the links below: 

American Land Title Association: https://www.homeclosing101.org/ 

Secret Service: https://www.secretservice.gov/investigation/Preparing-for-a-Cyber-Incident

For additional information, including how to contact law enforcement: 

Secret Service Field Offices: https://secretservice.gov/contact/field-offices 

FBI: https://www.ic3.gov/

The information provided herein does not, and is not intended to, constitute legal advice; instead, all information, and content, in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. 

Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration