The Legal Hotline has received multiple calls from listing agents who, upon listing vacant land, have grown suspicious that the person who signed their listing may not be the rightful owner. This mirrors a national trend where title companies are reporting an increase in scams involving vacant land properties.

The Scam

In this scheme, the purported “owner” is actually an identity thief. Exploiting e-notarization and online communications, the criminal poses as the property owner, orchestrating a fraudulent sale of the vacant land well below market value. The transaction is rushed through with a swift escrow, allowing the scammer to pocket the proceeds, defrauding the actual owner, buyer, and all involved service providers.

Recognize the Warning Signs of Vacant Land Property Scams

These scammers employ various tactics to avoid detection until it’s too late:

  • They often target unencumbered property, particularly vacant land, to reduce the risk of the true owner discovering the fraud.
  • Estate properties where ownership hasn’t been transferred properly to heirs are also common targets.
  • Look out for recently recorded deeds aimed at erasing the original owner’s trail and shielding the scammer.
  • Scammers push for a quick closing and drastically under-market pricing to expedite the sale.
  • They avoid meeting in person, preferring online communication via email or text, sometimes using burner phones for calls.
  • Insisting on their chosen e-notary or arranging notarizations themselves, they refuse in-person signings.
  • Even if the owner is local, they opt for mail-out or remote/e-closings.
  • They demand cash transactions and direct sales proceeds to individuals not listed on the property title.

Sometimes the Signs Are Clear

Occasionally, a glaring clue might present itself when someone other than the supposed property owner reaches out to inform you they are not selling their property, and that they are the rightful owner. Take this revelation very seriously. In such a scenario, your immediate step should be to discuss the situation with your broker, who may then consult with legal counsel to explore options for terminating the listing.

What Steps Can You Take if You Suspect Your Client Isn’t the True Owner?

Here are additional actions a listing agent might consider, especially if other warning signs are evident:

  1. Investigate the Property: Utilize your knowledge as the listing agent to delve deeper into the transaction details. Check if the property is vacant land, part of an estate, or significantly underpriced. Review preliminary title reports to verify mortgage statuses and check for any liens. Be aware that a sophisticated scammer may have recently recorded a fraudulent deed to transfer ownership to themselves or a shell company to obscure their identity.
  2. Confirm Ownership: If suspicions persist, conduct independent research to verify the true owner’s identity. Look for photographs or other identifying information that can help validate the ownership.
  3. Direct Contact: Attempt to directly contact the owner of record listed in official documents. This can clarify if they are indeed the same person who signed your listing agreement.

What to Do if You’re Convinced the Signer Isn’t the Actual Owner?

As previously mentioned, your immediate action should be to seek guidance from your broker, who may involve legal counsel to discuss the potential cancellation of the listing agreement. Ideally, a negotiated cancellation using the Cancellation of Listing form (C.A.R. Form COL) is preferable to mitigate risks of breaching the listing agreement.

While the impulse might be to report your suspicions to the police or the title company right away, it’s prudent to consult with an attorney first. This ensures consideration of confidentiality, fiduciary duty, and other legal implications. Any decision to alert others or disclose information about the suspected scammer should be carefully weighed after thorough consultation with your broker and legal counsel, taking into account the specifics of your situation.

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Sources: https://www.car.org/en/aboutus/mediacenter/news/vacantpropertyscam