A client of mine owned a rental property in Florida while he lived outside the U.S. He had a property manager handle everything related to the property. Unbeknownst to him, his property manager was approached by a fraudster who was impersonating him. The fraudster created an email address very similar to my client’s email address and sent emails to the property manager. The fraudster told the property manager he wanted to sell the property and subsequently hired a realtor to list the property.
Once a buyer was found, a contract was entered, and the closing process began. The actual owner, my client, had no idea that any of this was going on. There were numerous red flags throughout the whole ordeal that the real estate professionals involved should have caught. The fraudulent seller’s English was poor, he only communicated by email, the passport used was fake, a fake U.S. consul notarized the deed, and the fraudster had the title company send the closing proceeds to a bank account in Vietnam.
I hope this brief blog post will help buyers, sellers, and real estate professionals prevent fraud by fake sellers. Examples of fraud red flags to look out for include:
Absent seller – If the seller is absent and only communicates by email or has someone else communicating on the seller’s behalf, be suspicious.
Foreign Signing – If documents are executed outside the United States, then extra caution should be used.
Misspellings – Watch out for misspellings by the seller, whether that be emails, closing documents, identification, etc. Fraudulent sellers tend to not have a good command of the English language since many are located outside the U.S.
Rush – If the seller is trying to rush the closing process, then your fraud antenna should go up.
Power of attorney – Power of attorney’s are convenient and many are legitimate, but they can be easy to fake. If someone is using a power of attorney, use extra caution. Ideally, contact the principal to know that the principal authorizes the power of attorney.
Consulate – If closing documents are notarized by a U.S. consulate, then be suspicious. There are lists given out by major title insurance companies of fraudulent U.S. consulate’s that should be reviewed to determine whether the consulate might be fake. You can also call the U.S. consulate to confirm the closing documents were signed and notarized at that consulate office.
Price – If the property is being sold well below market list price, then proceed with caution.
Passport – Watch out for inconsistent information on a passport or misspellings. You can check passport formats online for the year that the seller’s purported passport was issued. If they do not look right, that is a major red flag.
Wire location – If the seller is asking for proceeds to be wired outside the U.S. to a country that is not connected to the seller, that is a serious red flag. Especially watch out for wire instructions to Southeast Asian countries, such as Vietnam or the Philippines.
Disbursement – Closing proceeds should not be disbursed to anyone except for the actual seller of the property. In other words, the seller on title should be the name on the seller’s bank account.
Entity – If the seller is an entity, then check the entity’s information online to see if it was changed recently. In some states, it is easy to change entity information online, so a fraudster can change the owners of the entity. I have had a prospective seller approach me about closing on their property with an entity that had its information online changed very recently in a suspicious manner. All the officers of the entity were changed to a single individual whose name was very different from the prior owners (prior owners had Hispanic names and the new supposed owner had an Asian name). I asked the prospective seller for identification and bank information for where the seller wanted the proceeds to go. The identification provided was a Thai passport that was fake and the seller said the proceeds would go to the seller’s bank account outside the U.S. After a bit of questioning, it became clear that the seller was a fraudster.
Leave a Reply