Real estate fraud in the United States is a growing concern among industry professionals, especially in the state of Florida. In 2022, despite a decrease in the number of reported fraud incidents, the Federal Trade Commission (FTC) received more than 2.4 million complaints, amounting to almost $8.8 billion in damages. The scheme of choice for fraudsters in Florida changes as quickly as the weather, but Florida’s history with land fraud remains consistent. Most people have heard of the term Ponzi Scheme, but many may not know the scheme originated here in the sunshine state. In the mid-1920’s, Charles Ponzi purchased 100 acres of land located “near Jacksonville” and further subdivided the land into 23 plots, advertising them as “prime Florida property”. In reality, he was selling swampland located some 65 miles east of Jacksonville to unsuspecting and eager sunseekers. While Charles Ponzi did not get away with his crimes, the fraudsters of today have become far more savvy and have adopted new schemes. Here are three common schemes to be cautious of when buying and selling property in the sunshine state:
Deed Fraud
Deed fraud typically involves vacant or abandoned land, or properties owned by out-of-state individuals. The fraudsters will execute a quit claim deed, committing seller fraud by impersonating the real owners, and conveying the land to themselves. Once the deed is recorded, the fraudster will contact an unsuspecting Real Estate Agent to list the property. Since remote showings and virtual closing requests have become the norm as a result of the COVID-19 pandemic, the thought of not meeting the seller in person may not raise any initial red flags. The “seller” typically insists on listing the property below market value to generate interest and a quick sale. As soon as the property is sold and funds from closing are received, the fraudster disappears with the proceeds, never to be heard from again. Eventually though, the true owner discovers that they are no longer the owner of record. This situation is on the rise in Brevard County and causes serious issues with the chain of title and jeopardizes the ownership interests of the two apparent owners. If a title insurance policy was purchased, this type of fraud is typically covered, though a closer review of the policy would need to be conducted by a qualified real estate attorney.
Buyer Fraud
This scheme usually involves overseas or foreign buyers who contact sellers or Realtors through a website or via email. The buyer explains that they are overseas for work or a family matter and will not be returning until after the scheduled closing. The scammer will send a sizeable escrow deposit in the form of a cashier’s check, provide proof of funds and copies of their ID; all very convincing forgeries. A few days after the check is received and deposited, but before the proceeds clear the escrow agent’s account, the buyer will reach out providing a sob story and a request that the money be urgently returned. The buyer may even offer to let the seller keep a portion of the deposit as an apology for the inconvenience; a seemingly nice gesture meant to ease any suspicions. If the seller is agreeable, the buyer will provide wiring instructions and ask that the seller return the agreed upon funds as soon as possible. Trusting the buyer is telling the truth, the seller may cancel the sales agreements and authorize the return of escrow funds. To the seller and escrow agent’s shock a few days later, the buyer’s check bounces leaving the trusting parties without their money and the buyer’s deposit.
Wire Fraud
Scammers claiming to work with the closing agent or escrow company will reach out with instructions on where to wire the escrow deposit or closing funds. Fraudsters will go to great lengths to carry out this ruse, even setting up fake websites that appear similar to the closing agent’s, spoofing phone numbers, and opening email accounts with nearly identical email addresses. These fake accounts can look so real, it makes the scammers request seem legitimate. While scammers typically impersonate the title company, they also use the same tactics to mimic lenders offices. Occasionally, the fraudsters will even target the closing agent by pretending to be the client and provide fake wiring instructions for the closing proceeds. No matter the relationship to the transaction, it is always a good idea to call the intended recipient of the wire immediately prior to initiating the transaction, to confirm their wiring instructions.
Real estate fraud is a common occurrence with devastating effects. While there are preventative measures being implemented by multiple states and governments across the United States, fraudsters always seem to find new ways to carry out their scams. The best way to protect yourself is to remain vigilant, stay informed about the types of scams happening in your area, and work with a team of professionals who will help protect your best interests. If you or someone you know has been impacted by or were attempted victims of real estate fraud, be sure to file a report with the Federal Trade Commission. Contact our office today to find out how the attorneys at Lacey Lyons Rezanka can help protect you from various forms of fraud during your real estate transaction.