The U.S. Secret Service has advised about an increase in reports of real estate fraud concerning vacant properties. These schemes involve a criminal that identifies real estate, typically a vacant lot or a rental property, that is usually free of mortgages or other liens. The criminal can obtain detailed property information and the owner’s identity by conducting a search of the public records (i.e., County Recorder’s Office). They will then pose as the owner of the property and attempt to sell the same. They will refuse to sign closing documents in person and request a remote notary signing. The notary is either falsified or the criminal posing as the notary. The falsified closing documents are then provided to the closer and the proceeds are then transferred to the criminal. This scheme is usually discovered when the documents are taken to the recorder’s office or when the true owner has a title search done and discovers this transfer has taken place. By that point the criminal had already received the net proceeds and disappeared.

In the past, this was a common scam that occurred in FSBO transactions but now the criminal, posing as the property owner, is contacting real estate brokers requesting that they list the property. This tactic, unfortunately, serves to add a layer of “apparent” legitimacy to the scheme. A criminal may even reach out to newer inexperienced agents with promises to kickstart their career by listing their properties. Members should be on the lookout for these red flags when contacted by potential sellers:

• The “seller” cannot meet in person and all communication is via phone or email.
• They spin a tale involving a dire situation or family crisis and advise that they need cash as soon as possible.
• They are eager to list the property below market value and push for cash offers.
• The contact email and/or phone number is from another country.
• They do not appear interested in having a buyer provide earnest money or they are accepting an unusually low amount of earnest money.
• The photo ID that they provide is difficult to view or illegible.
• They do not return paperwork in a timely manner, or at all, and do not seem interested in fulfilling the terms of the contract (except proceeding to the closing).
• They use aggressive, angry and pushy language toward the broker to force the deal to closing.

Here are some ways for members to complete their due diligence in confirming that they have been contacted by the true owner of the property:

• Be skeptical, especially when dealing with a person solely through electronic communications.
• Ask the owner for detailed information about the property.
• Independently research the owner.
• Request a clear photo ID.
• Request an in-person or virtual meeting. At that meeting request that they show you their photo ID. (Be wary of excuses such as “I can’t do this because I’m in a different time zone,” or “I’m too busy.”)
• Contact the listed property owner using a verified phone number. Send a letter via overnight mail to the address that is noted on the property tax bills.
• If possible, verify that the notary is real or in the alternative, never allow a seller to arrange their own notary closing.
• If possible, use trusted attorneys and title companies for the exchange of closing documents and funds.

About the writer: Victoria Munson is the Illinois REALTORS® Legal Hotline Attorney.