Las Vegas, NV August 31, 2023
The Nevada Division of Insurance and the
Nevada Real Estate Division want to bring public awareness and education to an
increasingly prevalent real estate identity theft scam. Known as “vacant lot
fraud” or “seller impersonation fraud,” bad actors impersonate the owners of a
property or vacant lot and attempt to sell it for their own profit.
Unsuspecting owners, eager buyers and even
licensed real estate and insurance professionals guiding the transactions can
all unknowingly end up as victims in these elaborate identity theft schemes. The
best way to protect yourself from this rising threat is to understand how the
scam works, know the red flags to look out for, and the precautions you can
take to prevent this scam from happening to you or your clients.
How the scam works
Scammers search public records to identify owners
of real estate that is free of a mortgage or other liens, most often targeting
vacant lots and investment, vacation or rental properties that are non-owner
occupied. The scammer then poses as the owner and contacts a real estate agent
to list the property for sale. Once an offer is made, the scammer quickly
accepts it, then sends falsified documents to the title firm or closing
attorney. The closing proceeds are then transferred to the scammer leaving the
fraud typically undiscovered until transferring documents are recorded with the
applicable county.
Watch
out for red flags
According
to the American Land Title Association (ALTA), homebuyers and licensed professionals
alike should consider conducting additional due diligence or halt a transaction
if they see these potentially suspicious seller behaviors:
- Seller is difficult to reach
via phone or refuses to meet via video call; only communicates via text or
email
- Seller sets listing price lower
than the current market value and wants a fast cash sale with little or no fee
negotiation
- Seller refuses to attend
signings; always claiming to be out of town
- Seller requests to use their
own notary
- Seller demands proceeds be
wired
- Seller has a different address
than the owner’s address or tax mailing address
- Seller refuses or is unable to
complete multifactor authentication of identity verification
Precautions
you can take
ALTA
advises title and real estate professionals to take the following precautions during
the transaction to help thwart scammer’s attempts early on:
- Contact the seller directly at
an independently discovered and validated phone number
- Send mail to the seller at the
address listed on tax and property records
- Ask the seller’s real estate
agent if they have personal or verified knowledge of the seller’s identity
- If using a remote notary, be
sure the notary is fully vetted and approved by your state; otherwise, the
title company should arrange for an in-person notary signing at an attorney’s
office, title agency, or bank.
- Verify the seller’s identify by
sending the seller a link to complete a third-party identity verification
- Run the seller’s email and
phone number through a verification program
- Ask conversational questions to
ascertain seller’s knowledge of property information not readily available in
public records
- Compare the seller’s signature
to previously recorded public documents
- Use a wire verification service
or confirm wire instructions match account details on seller’s disbursement
authorization form
- Require a copy of a voided
check with a disbursement authorization form
- Require that a check be sent
for seller proceeds rather than a wire
Additionally, property monitoring services
are offered by most county recorder’s offices to help alert owners to any
activity or attempted transactions involving their property. Prospective buyers
can also purchase the American Land Title Association Homeowner’s Policy of
Title Insurance for additional fraud protection. If you are ever in doubt, have
questions, or something does not feel right during a real estate transaction,
always speak directly with your real estate agent/broker or your title
insurance agent.
Report
fraudulent activity immediately!
It
is crucial to remain vigilant and report any suspicious or fraudulent activity
immediately. Fraud reports can be filed at any of the following entities:
About the Nevada Division of Insurance
The mission of the Nevada Division of
Insurance is to protect the rights of Nevada consumers in their
experiences with the insurance industry and to ensure the financial solvency
of insurers. For more information about the Division of Insurance, visit DOI.NV.GOV or follow the Division on Twitter, Facebook, LinkedIn, or Instagram.
About the Nevada Real Estate Division
The mission of the
Nevada Real Estate Division is to protect the public and Nevada's real estate
sectors by fairly and effectively regulating real estate professionals through
licensure, registration, education, and enforcement. For more information about
the Nevada Real Estate Division, visit RED.NV.GOV.
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