The real estate scam in which imposters fraudulently sell vacant land free of mortgage liens out from under the true owners was attempted recently in Danbury and Goshen.
Retained to handle what appeared to be legitimate transactions, Cramer & Anderson’s highly experienced real estate attorneys, including Partner Neal White, determined that imposters were claiming to own vacant lots.
One of the imposters, who purportedly lived in South Africa, had been able to list the property and move a deal forward with a potential buyer.
However, the attorneys involved exposed the attempted scams before the deals could move to a closing, in part through a slow and deliberate review process.
In the Danbury scam attempt, after the true owner discovered an imposter had listed his property, only he could provide property tax bills and payment receipts as proof of ownership.
Vacant property fraud has been happening more and more frequently across the country. In May of 2023, a Los Angeles TV station reported that a closing was imminent on a vacant lot being sold by someone impersonating the owner. Media reports chronicle similar scams in Texas, Arizona, Florida, North Carolina, Louisiana, and many other states.
“In Connecticut we are seeing a dramatic rise in these land scams,” said Jon Anderson, Vice President & Chief Underwriting Officer for CATIC (Connecticut Attorneys Title Insurance Company, Inc.) “We continuously educate our agents about the red flags and recommend that our agents, the Realtors, and the lenders use a reasonable level of due diligence to confirm the authenticity of the parties and the transaction. Like many other types of fraud, these scams are successful when legitimacy is presumed, rather than verified.”
In January, the U.S. Secret Service, whose duties include policing cybercrimes, partnered with wire fraud protection company CertifID to issue a news release and advisory in response to “a sharp increase in impersonation scams and wire fraud related to vacant and unencumbered property.”
“This recent trend involving seller impersonation is particularly concerning, as the real property owner is typically not aware nor in a position to prevent the fraud, until it is too late,” the advisory said.
Read the Secret Service
Vacant Lot Fraud Advisory
The advisory cited information from the National Association of Realtors (NAR) in describing how the vacant property fraud scams work:
- Public records are searched to identify real estate that is free of mortgage or other liens. These often include vacant lots or rental properties. The identity of the landowner is also obtained through this public records search.
- Posing as the property owner, the scammer contacts a realtor to list the property for sale. All communications are through email and digital means, and not in person.
- The listing price of the property is typically below current market value, to generate immediate interest in the property.
- The scammer quickly accepts the offer, with preference for cash sales.
- At the time of closing, the scammer refuses to sign documents in person and requests a remote notary signing. The scammer impersonates the notary and returns falsified documents to the title company or closing attorney involved in the transaction.
- The title company or closing attorney transfers the closing proceeds to the scammer. The fraud is typically not discovered until the time of recording of transferring documents with the applicable jurisdiction.
The news release announcing the Secret Service advisory attributed the rise in vacant property fraud in part to a decline in home sales. “As a result, cybercrime rings have turned to new tactics to make up for the lower housing market transaction volume that they can target,” the release said.
In warning of the vacant property fraud scam, the Long Island Board of Realtors listed these “red flags” to watch for:
- The seller claims to be living out-of-state or on vacation (sometimes abroad), claims they cannot meet in person, and insists on doing everything by email.
- The seller refuses to or is reluctant to speak by telephone.
- The seller claims that, due to a family or business emergency, it needs a quick cash sale, and will accept substantially less than full price if a seller can be found quickly.
- The seller’s provided email address or phone numbers are from another country.
- The copies of the seller’s photo IDs, such as driver’s licenses or passports, are of poor quality or barely legible.
- The seller applies pressure on the real estate broker to make sure the deal goes through. Sometimes they offer an incentive such as a commission bonus or a promise of future business.
- The seller insists on funds being wired to multiple people or accounts.
The Long Island Board of Realtors suggests that real estate licensees can protect themselves and clients with these steps:
- Before taking a listing for vacant land, request an in-person or virtual meeting with the seller, to see the seller’s face and whether it matches any provided government-issued identification.
- Independently search the Internet for the seller’s identity and a recent picture of the seller to determine if they match the seller’s provided government-issued identification.
- Be on alert with a seller willing to accept an offer price below market value in exchange for the buyer paying cash and closing quickly.
- Never let a seller arrange their own notary closing.
- Use a trusted title company and closing attorney to coordinate the exchange of closing documents and funds.
Anyone with questions or concerns about vacant property fraud may contact Attorney White by phone at (860) 567-8718, or by email at nwhite@cramer-anderson.com, or connect with any member of our team of highly experienced real estate attorneys through the firm’s Real Estate Law page.
