Over the last few months, the Florida title industry has experienced an ever-increasing volume of sales and mortgages that have been found to be fraudulent. Most commonly, the property is vacant with no mortgage. Often the lot is owned by a seller whose address shows they live in a foreign country. The fraudster either forges a deed from the true owner to the fraudster, or just holds himself out as the true owner. The fraudster lists the property for sale (often on Zillow), for a very attractive price. A buyer bites, the closing date is set, and if someone does not figure it out, the fraudster gets away with many thousands of dollars and no one knows until it is too late to recover the money.
In some cases, the fraud has been discovered before closing and a claim has been prevented. In one case the lot being sold was part of a three-lot parcel used for one home that the owner lived in. The true owner noticed people looking at her large yard and asked why. They told her they were buying one of her lots. She was not selling it, but it was listed for sale by someone else pretending to be her on Zillow.
In another case, the true owner was a 90-year-old woman, but the person purporting to be the owner and who was in contact with the real estate broker was a much younger person.
In yet another case, the seller resided in Germany and the fraudster communicated with the realtor and the Fund Member only via email. No personal contact at all.
Most commonly, the seller/fraudster wants to close via mail and does not want to come into your office.
We should all be very diligent in our efforts to stop these frauds before they close, and ideally, before much time or work has been expended towards closing them. If you are asked to handle the sale of a vacant lot, you should:
- Determine if the property is vacant and has no mortgage as early in the transaction as possible. If you can make this determination before ordering the title work, it will save you and your title information provider much work and money.
- Contact the true owner to verify they are selling the property and to whom for what price.
- Do not use the owner’s contact information provided in the Zillow ad or by the real estate broker or salesperson.
- Independently find a telephone number for the owner or send an overnight delivery service letter to the address where property tax bills are sent.
- Talk with the realtor that referred the closing to you. Do they know the seller? Did they have any phone communication with the seller in connection with the listing or sale? If all communication was via email with no preexisting relationship, be on high alert!
- If you send out closing documents to the seller/fraudster, carefully review the signatures, witnesses, and notary when they arrive back in your office:
- Get a copy of the passport that was used as identification. Check with the country who issued the passport to verify the passport is valid and has not been altered. There are several services that can handle this online for you.
- Consider requiring a second form of identification.
- Verify the notary is a real person appointed by the applicable governmental agency. Require the notary give you their contact information when they send the documents back.
- Consider RON as a requirement for the notarization in lieu of an in-person notarization. If the Seller refuses, it might raise a red flag.
- The proceeds should only be disbursed to the person in title unless the situation merits an exception. Check with Underwriting or Risk Management.
Do not be fooled by an “easy” closing, even if it comes from a trusted referral source. They can be duped, too! Slow down, pay attention to the details, and ask questions! And if you have any questions, contact Underwriting or Risk Management.