How to avoid getting scammed out of your home or becoming a victim of land fraud

Housing ReporterSeptember 28, 2023

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He eventually got the property back, but at the cost of a few thousand dollars and a major headache.

Gordon isn’t the only victim of this type of fraud — known as home-title fraud, land fraud, or seller-impersonation fraud — where scammers impersonate the rightful owner of a property by forging documents in order to sell it. Dr. Daniel Kenigsberg also had his property sold fraudulently in Fairfield, Connecticut. Both properties were vacant pieces of land, which experts say are easier to swindle.

The FBI reported 11,578 people lost $350,328,166 to real-estate scams in 2021, an increase of 64% since 2020.

Victor Petrescu, a partner at Levine Kellogg Lehman Schneider + Grossman in Miami, represents victims of real-estate scams and said this type of fraud is happening all the time.

“I get maybe one or two of them a year,” Petrescu told Insider, noting vacant properties are more commonly targeted than developed properties. “And we’re a pretty small firm, so if I’m seeing a couple of these a year, I would say it’s more widespread than it should be.”

Petrescu and Gordon share a few measures property owners can implement to help stop land fraud from happening to them.

Don’t skip title insurance
Petrescu’s first piece of advice is to have title insurance. That may seem like an obvious one, but for a vacant piece of property, owners might forgo that extra security.

Gordon had title insurance on his Arizona property, but he found it to mostly protect the buyer in the fraudulent land sale, he said.

“I had a long conversation with the title insurance company on what they cover and what they don’t cover,” Gordon told Insider. “Once you own the piece of property, the title insurance company said they would not have covered this for me. It covers things that occur before you purchase the property that somebody missed, such as a lien, or a discrepancy in the property boundaries, or things like that.”

Another title-related tip from Petrescu is to always use the same closing agent or company to close all of your transactions. The logic being that if you establish a personal relationship with your title company, or a particular agent, then forged signatures or incorrect personal information will be easier for them to spot.

“Be familiar with the closing agent that handles your transactions, and hopefully they would call you if there’s an attempted sale,” he said.

Unfortunately, this advice did not work for Gordon, proving how thorny of an issue it is. He used the same title company to buy the land and to refinance it a year later. His property was fraudulently sold through that same title company, but they didn’t stop the sale, he said.

“Here we have the same title company that I used, and now the fraudster’s using the same title company,” Gordon said. “And they did nothing to help.”

Carefully check your mail — and county records
It might seem simple, but always thoroughly check your mail, Petrescu said.

Gordon found out that his property had been sold after receiving a letter — that he almost threw away — from his title company congratulating him on a successful sale. Of course, he hadn’t sold the property, but Petrescu indicated that a lot of property owners might have discarded the piece of mail thinking it was a scam of some sort.

“Immediately check your mail if you get something that may look like spam relating to your property,” Petrescu said. “Make sure you’re reading it thoroughly and you have an idea of what’s going on.”

Petrescu also added that it’s important for you to regularly check on your property through your county’s online database — that way you’ll know whether or not a document has been recorded.

“Make sure you’re checking the property records where your property is located every so often — every month, every two months,” he said. “You’ll see documents being recorded before the sale is even finalized.”

Recently in Pima County, Arizona, where Gordon was the victim of home-title theft, the recorder’s office rolled out an opt-in alert system that will notify property owners when their names are used in filed documents.

Gordon sees this effort from the county as a “Band-Aid” for the problem and not a step in preventing fraud from happening, since the alert comes after a document is recorded.

“The alert is after the fact,” Gordon told Insider in August. “It’s telling you timely, which is important, but no, it doesn’t prevent it.”

Set up MLS alerts, and make sure your personal info is safe
Gordon set an alert up on a local MLS that matches his property. That way if his property goes on the market, he’ll get notified.

“If anything within that block comes up for sale I may get notified, that’s fine — I’d rather have that little bit of extra notification,” he said. “If all of a sudden I see that something hits the MLS or Zillow or whatever and it’s my property, I’m going to know, I’m going to get an email.”

Lastly, Petrescu said property owners should pay extra attention to making sure their personal information is protected.

“If you’re putting yourself at risk of having your social security number stolen, your driver’s license number stolen, you’re making it easier for someone to do something like this,” he said. “So make sure your personal information is protected and that you’re being careful with it.”

Are you a property owner who has experienced this kind of fraud? Reach out to reporter Taiwo Ajayi at taiwoadeola860@gmail.com to share your story.

Source: Businessinsider