Briefing: Warning of Fraudulent Real Estate Activity
Overview:
Recently a local real estate agent was contacted through an online lead to list a vacant lot in a very populated neighborhood in Huntsville for out-of-state clients. Following an initial phone interview, the agent conducted due diligence by verifying the deed and current survey information before listing the property for sale. The property ended up quickly going under contract and proceeded through the title process without apparent issues, with ongoing communication with “the sellers” throughout the process. However, after closing, it was discovered that “the sellers” were fraudulent and had never owned the property. Despite verifying deed and survey records, the fraudsters were able to misrepresent themselves as legitimate sellers & maintained regular and convincing communication, further reinforcing their false identity. The transaction appeared legitimate throughout the title process, highlighting the need for additional verification steps that are listed here to hopefully help protect others from this happening.
Some Preventative Measures:
- Enhanced Identity Verification: Implement multi-step identity checks, such as requesting notarized identification, conducting live video calls, and verifying ownership with tax records and government offices.
- Cross-Checking Documentation: Compare ownership records with multiple sources, including local tax authorities and official land registry offices.
- Heightened Due Diligence for Out-of-State Sellers: Require additional verification steps for non-local property owners, particularly for vacant land transactions.
- Title Company Collaboration: Work closely with title companies to incorporate fraud detection measures and verify seller legitimacy.
- Report Suspicious Activity: If any red flags arise, report potential fraud to local real estate boards, law enforcement, and fraud prevention agencies.
Real estate professionals must remain vigilant against fraudulent schemes, particularly when dealing with vacant land/lots and remote sellers (even with a notary!). By implementing rigorous verification processes and working closely with title companies and regulatory authorities, agents can mitigate risks and prevent fraudulent transactions. Staying informed and proactive is essential to protecting clients and maintaining the integrity of the real estate industry. If you have concerns or have been frauded you can reach out to local law enforcement and the FBI at IC3.gov