Town & Country Real Estate

Title Fraud on the Rise: How to Thwart Fraudulent Sellers and Protect Your Clients’ Investments

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Susan Donofrio | Vice President, Town & Country Title

A recent title fraud situation on the North Fork is a prime example of why getting a title search involved early is imperative. A purported owner of a property in New Suffolk reached out to a real estate agent outside of the area looking to sell a piece of vacant land. The agent took all the information over the phone and never met the seller. The property went to contract. A neighbor of the vacant property became aware of the sale and contacted the owner about the sale. The owner’s response, “What sale?” When the actual owner contacted the realtor, it was determined that the person purporting to be the owner was a fraudulent seller. The police were contacted, and the sale was stopped. The “seller” is now nowhere to be found and has moved on to the next target. Luckily this particular transaction was thwarted.

Unfortunately, this is not an uncommon event, we are seeing more and more of these types of situations, specifically on vacant land. It would be in the best interest of all parties to be extra vigilant when dealing with vacant property or seasonal property sales.

What steps could have been taken by the real estate agent?

  1. When you are offered a listing get a “last owner” search done on the property as soon as possible. While not a full search for the buyers, it will be enough to provide the property’s status. It will give you the owner’s name and hopefully documents that contain their signature. Any documents provided should have the signatures compared. It will also give you any liens from the current owner attached to the property, such as Federal Tax Liens, judgments, and mortgages. This can provide some insight into what hurdles may need to be overcome.
  2. Push to meet the seller in person, or at the very least over Zoom, and make sure they have an ID available at the meeting. Check the ID and signatures of documents that are of record. Ask for multiple forms of ID at the onset, and note any red flags, for example, illegible ID, ID from other than the place they are purporting to live, and the inability to quickly produce multiple forms of ID. Another red flag could be the lack of an attorney to represent them, often people perpetuating fraud veer away from using legal counsel.
  3. Make sure your buyer ALWAYS gets title insurance, regardless of the purchase price. If this deal had gone through, the buyer would have been protected by that insurance policy. They would not have been able to keep the property, but their investment would have been protected.

Being diligent and knowing the people and the property you are representing will always put you in a better position for a successful outcome! No one wants to be the realtor in our example who had to then become involved in a police investigation. Following these few simple steps could significantly reduce the chances of being duped. Stay vigilant, don’t let this be you!

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