Beware of Vacant Land Property Scams: Spot the Red Flags!
Vacant land property scams are cropping up all over the place, including right here in Ventura. Scammers are getting bold, posing as property owners and tricking unsuspecting buyers into purchasing land that doesn’t belong to them. It’s become a concerning trend in the California housing market, and we need to be on high alert.
The Scam: How It Works
These con artists are masters of deception. They pretend to be the rightful owners of vacant land and use online tools like e-notaries to carry out their fraudulent activities. They lure buyers in by selling the property below market value and pushing for a quick closing. Once the deal is done, they make off with the money, leaving everyone else involved in the dust.
Look out for these telltale signs and red flags:
Unencumbered Property: Scammers target land without existing liabilities, making carrying out their deceitful schemes easier.
Vacant Land or Estate Property: They typically go after vacant lots or properties that have yet to be correctly transferred to heirs after the original owner’s passing. This minimizes the chances of the true owner finding out about the scam.
Recent Deed Record: A fraudulent deed might have been recently recorded to erase any trace of the actual owner and avoid getting caught.
Urgency for a Quick Closing: Scammers want to finalize the deal as soon as possible, putting pressure on buyers to act fast.
Unrealistically Low Price: They deliberately underprice the property to attract buyers and make the transaction seem too good to pass up.
Online Communication Only: Scammers avoid face-to-face meetings and stick to email or text conversations. If they do call, it’s likely from a burner phone.
Demands for E-Notary: They insist on using their chosen notary or handling the arrangements themselves, never agreeing to sign in person.
Mail-Out or Remote Closing: Scammers prefer remote or e-closings to maintain their anonymity even if the owner is nearby.
Cash Payments: They demand a cash close, avoiding any traceable transactions.
Disbursement to Uninvolved Parties: The sales proceeds go to someone not listed as the property owner.
Sometimes, the truth falls right into your lap. If someone other than the person who signed your listing contacts you claiming to be the true owner, take it seriously. In such cases, speak to your broker and consider canceling the listing agreement.
What to Do If You Suspect Fraud?
If you have other reasons to believe your client isn’t the rightful owner, here are steps you can take:
Investigate the Property: Look into the transaction details, such as whether the property is vacant or part of an estate. Check if the mortgage is paid off and the property is lien-free. Scammers might have recorded a fraudulent deed, so stay vigilant.
Establish the Owner’s Identity: Conduct independent research to verify the owner’s identity if suspicions arise. You might find a photo or other identifying information that confirms who the actual owner is.
Spotting Vacant Land Property Scams
Scammers are targeting vacant land properties, posing as owners and deceiving buyers into purchasing land that isn’t theirs. This alarming trend has been observed in Ventura and other locations nationwide. Real estate agents should investigate the property, establish the owner’s identity, and consult their broker if fraud is suspected. Trust your instincts and take preventive measures to avoid these scams.
Trust Your Gut and Take Preventive Measures
Real estate agents can take proactive steps to ensure the legitimacy of vacant land sales. Consider the following measures:
Investigate the Property:
- Early on, determine if the property is vacant.
- Review the preliminary title report to confirm it’s free of mortgages and liens.
- Contact the real estate agent to learn more about the property and whether they’ve met the owner.
Contact the Owner of Record: Contact the owner directly to ensure they’re the same person who signed your listing.
If you’re convinced the person who signed your listing isn’t the owner, consult your broker and consider canceling the listing agreement. Seek legal advice before taking further action, such as involving the police or reporting the scam to the title company. Be cautious and make decisions carefully, considering the specific circumstances and after consulting with your broker.
Vacant lot scams have been on the rise nationwide, including in Ventura. As real estate agents, we must be extra cautious and proactive to prevent falling victim to these fraudulent property sales.
Stay on Guard and Follow Your Instincts
Title agents nationwide have observed increased scams involving vacant lots, where fraudsters pretend to be property owners and attempt to deceive buyers.
While not a new trick, this scam is returning, and we must remain hyper-aware.
To help you stay one step ahead and thwart these deceitful property sales, we’ve gathered crucial information about how these schemes operate, warning signs to watch for, measures to verify property ownership, and the documents needed to confirm the seller’s rights to the property.
The Scheme: How It Unfolds
Scammers begin by scouring public records to find real estate that is unburdened by mortgages or other liens. They specifically target properties not occupied by the owners, including vacant lots, out-of-state ownership, and rentals where the owner doesn’t reside. Elderly owners are often the prime targets.
Fraudsters, armed with information from public records, pose as property owners and approach real estate agents to list the property for sale.
To entice buyers, the scammer prices the property below market value, aiming for a quick sale. Once the deal is closed, they siphon off the funds, leaving the actual ownership discrepancies undiscovered until the documents are filed with the county.
Watch out for these Red Flags
Fraudsters employ various tactics to keep professionals at arm’s length during the transaction. Here are some warning signs that should raise your suspicions:
Digital Communication: Scammers avoid in-person meetings and rely solely on email and other online channels.
The Urgency for Quick Closing: They push for a fast sale, pressuring buyers to act swiftly.
Preference for Cash Close: They indicate a preference for cash payments rather than traceable transactions.
Reluctance to Sign in Person: Scammers refuse to sign in person, instead demanding notary closings. They may even insist on using their “preferred” notary.
Disbursement to Unauthorized Parties: The sales proceeds are directed to someone who isn’t the property owner.
Inspect Suspicious Deeds: Be on the lookout for recently recorded fraudulent deeds. Scammers often target poorly maintained or unoccupied properties and those not correctly transferred after the owner’s demise.
Establish Seller Identity: Conduct independent research to verify the seller’s identity. Look for a photo of the owner or gather information that confirms their age and legitimacy.
Verify Identification: Carefully compare the seller’s signatures on all documents, including the listing agreement and disclosures, with the records. For foreign owners using passports for identification, contact the respective country’s passport agency to validate the passport’s authenticity.
Manage Notary Closings: Be cautious if the seller insists on choosing their own notary. It’s best practice to use trusted closers or closing attorneys.
Report Suspicions and Use County Alert Systems
Remember, while you might suspect fraud, it’s crucial not to share your concerns outside your office until proven in a court of law. If you have solid evidence of fraud, contact your agency owner or manager, who should contact local law enforcement.
Some counties have implemented property fraud alert systems; these systems notify property owners when any documents are filed against their property, serving as an early warning system. Check if your property’s county offers such programs.
Trust Your Instincts and Stay Vigilant
As a real estate professional, you have the skills to detect various types of fraud in real estate transactions. Often, your intuition plays a significant role in identifying suspicious behavior. It could be an overly excited buyer who finds an unbelievably fantastic deal or an unusual progression in the transaction. Whenever something seems out of the ordinary, investigate further to ensure the transaction’s validity.
Dustin Balloun, Ventura County Coastal Association of REALTORS®