Vacant Land Scams

WRITTEN BY AREA COUNSEL (AL/AR/MS), ZACHARY A. ATWOOD

Every year, we seem to have a new trend of title scams or fraud that becomes popular across the country. Over the past year, we have seen an increase in fraudulent land sales involving “vacant land.”  My office first saw this trend start in Florida, but it has spread across the country and has even impacted agents in all three member states of SLTA. The phrase “Vacant Land Scam” is a bit of a misnomer as scammers have not only targeted unimproved properties but also non-occupied properties such as vacation homes, abandoned improved lots, or rental properties. These properties typically have no mortgages, deeds of trust, judgment liens, or other encumbrances of record, as this allows the scammer to pose as a seller without dealing with payoffs, multiple identity verifications, and contact with interested third parties.

These scammers generally have a firm grasp on real estate transactions and have often used online research or local tax records to gain specific information about the property. Once they have identified a property without encumbrances and gotten the name of the title-vested owner from the public records, they pose as the owner and contact a realtor to list the property for sale. These scenarios can often appear as a typical transaction, but some common red flags should draw your attention.

The first line of defense for these scenarios will typically fall to you as the title agent, so it is important to be vigilant and communicate this issue to your realtor partners. If you or your team come across any of the following red flags on a transaction, please reach out to your underwriter for discussion and review:

1. Free and clear property that is known to be unimproved, abandoned, or a second home.
2. The seller is in a rush to close and is not concerned with withholding or closing fees; only concerned with receiving the net proceeds as quickly as possible.
3. The property is being sold for a price that seems to be below fair market value.
4. The seller cannot attend the closing in person due to work, health, or being out of the state or country.
5. The seller may be attempting to close using a remote notary process, mailed-in documents, and/or a POA in which they have no relationship with the named attorney-in-fact.
6. The seller only communicates with their agent or other parties by email or electronic communication.
7. Emails are from a foreign domain and/or contain typographical errors/boilerplate language.
8. The seller’s identification or the notary signatures are suspect.
9. The seller is not currently located at the contact address listed in the county tax records, or the acknowledgment is notarized in a location the seller is not supposed to be.

There are a few things that can be done if you believe that you have a suspect transaction:

1. Use an online database such as “PeopleFinders” to attempt contact with the title-vested owner.
2. Search locally for a possible estate proceeding or online obituary for the title-vested owner.
3. Contact the listing agent and verify the transaction details or suspect facts.
4. Require the seller to email or text you photographs of different forms of identification.
5. Verify a questionable notary through the Secretary of State’s online database and possibly contact them directly to verify the acknowledgment.
6. Contact letters have been incredibly successful in stopping these scams from occurring. A letter with specific details about the transaction or specific requests made by the closing office is mailed to the contact address listed in the county tax records. These letters can request the seller send a photograph of the letter to the agent’s email or cell phone.

You can also educate your realtor partners to do the following if they become suspicious of a certain transaction:

1. Independently search for the seller’s identity and a recent photograph of the title-vested owner.
2. Request property details or the vesting deed from you, their title agent, as they can use this information to confirm identity on their end.
3. Request an in-person or face-to-face virtual meeting with the seller to see if their government-issued identification matches. A legitimate seller should be able to accommodate this request.
4. Download an app or use a service like the Forewarn app, which verifies caller identities and provides current property ownership, financial risks, criminal history and other information about the person.

As always, please check with your underwriter to determine if they have guidelines for this title issue.