Recognizing Seller Impersonation and Fraudulent Land Sales

Stewart Title: To the Point! Know More. Do Better.

The following blog is part of our New York team's "To the Point" title insurance news blog series. Learn more about the series via our New York Metro or Upstate New York markets.

There has been a notable surge in fraudulent land sales attempts nationwide, encompassing various types of properties. Predominantly, these schemes target the sale of unencumbered vacant land. Perpetrators typically conduct extensive online research, demonstrating a comprehensive understanding not only of the specific property but also of real estate transactions in general. Consequently, the fraudulent seller can engage in transaction discussions with a high level of precision.

Numerous recent articles and bulletins highlight a range of "red flags" associated with these scams. While some of these indicators may be ordinary aspects of a sale on their own, an accumulation of multiple red flags in a single transaction should prompt a thorough examination of documents and transaction specifics.

In a typical scenario, the fraudster assumes the identity of the genuine property owner and enlists the services of a local real estate agent and/or attorney to facilitate the sale of a vacant lot. Communication between the purported seller and involved parties, such as the sales agent, attorney, and/or title company, exclusively occurs through phone calls, text messages, or emails. Transactions usually involve properties of lower value, lack financing, and often entail the seller claiming to be overseas or unavailable due to work, health or a family emergency.

Common red flags observed in these cases include the sale of vacant land, absence of outstanding mortgages, the seller's urgency to close at a seemingly undervalued price, non-U.S. citizenship of the seller, and the seller's physical absence from the address listed in the county's tax records.

Additional suspicious elements involve typographical errors or boilerplate language in emails from the seller, questionable email addresses (especially foreign domains), the seller's indifference to withholding or closing fees, and the absence of in-person closings with conveyance documents emailed to the seller. Signs of potential fraud also include suspect signatures and notary acknowledgments, the notarization of documents in a different location than claimed by the seller, and wiring instructions involving banks outside the U.S.

When a transaction raises suspicions, conducting independent research is crucial. This may involve checking online real estate listings, verifying the seller's identity through additional documentation like driver's licenses and passports, confirming notary details through the Secretary of State, and attempting direct contact with the property owner. A multi-layered verification process, including CertifID for wire instructions, is recommended to ensure the legitimacy of the transaction.

These attempted scams bear similarities to phishing and spearfishing schemes encountered in emails and social media. However, the potential consequences of falling victim to land sale scams require significant time and financial resources to rectify. Trusting one's instincts and promptly addressing any perceived irregularities is crucial in thwarting these fraudulent activities.

Click here for a list of common red flags as well as preventative measures.