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In a competitive real estate market, be on the lookout for scammers posing as property owners with a false listing. Agents should beware of common red flags when they suspect fake documentation and counterfeit deeds.
“A big red flag is if the ‘client’ is almost too easy to work for,” said Virginia REALTORS® General Counsel Laura Murray, speaking at a risk management session during the REALTORS® Legislative Meetings in Washington, D.C. “If something seems weird, trust your gut.” She added that sellers whose behavior seems out of the ordinary, such as being too demanding and claiming they need the money from the sale right away, are potential scammers.
Scammers typically seek out properties with no mortgage, Murray said. They might have an ID that doesn’t match the state of the listing, or they may request to use a remote or out-of-state notary or settlement company from a third location. “Most people want to have [a service] be convenient to them, and they're going to go to somebody that's close by,” she said. “So, if they're wanting to use a remote notary in another state or country, that’s another thing that should raise a red flag for you.”
How can agents and brokers help combat against fake real estate listing schemes? Murray offers the following tips for members:
- Always rely on government records, such as tax forms, to verify property ownership.
- Require identity verification before listing the property. Use websites and apps that can help verify IDs. “It’s not impossible [for scammers] to file fake documents with the locality,” Murray said. But scams can be detected early using current technology.
- Encourage clients to set up a Google alert so they get early warnings if their address gets added to a syndicated real estate website.
- Have a conversation with the property owner whose home has suddenly popped up as For Sale with unclear representation, and warn them of the listing. This can build good faith and lead to a future relationship whenever the true owner wishes to sell.
- Before completing a transaction, put something in the mail that goes to the address listed on the tax records of the actual deed holder; the scammer will not receive it at their listed address.
- Be careful not to inadvertently violate fair housing rights. Avoid implicit bias against sellers from certain demographics or countries of origin.
- If something seems suspicious, contact local law enforcement or the FBI.
- File a complaint with the Internet Crime Complaint Center.
- Contact your broker and insurance company to get yourself covered and make a plan.
- Document everything you have done to verify the person’s identity.
- Create a standard protocol document at your brokerage for validating sellers.
Understanding Property Possession Risks
Agents should also become educated on the legal implications of adverse property possessions by squatters and trespassers, as well as the differences between the two, said Maria Flaks, senior director of legal affairs for the Northern Virginia Association of REALTORS®.
For example, to be classified as a squatter in the state of Virginia, the individual must stay on the property without the owner’s permission in order to comply with the “Hostile Claim” rule. They must demonstrate having no legal rights, no title, no liens and no other regional property agreement in place. And they must have had continuous and uninterrupted access to the property for a certain length of time. In Washington, D.C., and Virginia, for example, that amount of time is 15 years. But the quantity can range from five to 30 years, depending on state laws. In some cases, the individual may have even paid property taxes.
The “Actual Possession” claim applies to squatters who actively make improvements to the property. “It has to be obvious the squatter is living there,” Flaks said. “They need to treat the property as the owner would.”
While a squatter is claiming ownership rights, a trespasser does not claim to live on the property and is typically a transient. A squatter might build something on the land or change something tangible on the property, but a trespasser typically would not alter the property and has no pathway to acquiring legal rights.
A property owner’s biggest risk is failing to do a property inspection for years, not realizing someone has taken possession. This could result in losing the property title to the individual who has taken over use of the property and/or land. “It does happen. It’s important to avoid this because going to court can be time-consuming and expensive,” Flaks said.
Florida, Georgia, New York, South Carolina and Virginia recently passed laws that can speed up the process for resolving squatters’ rights cases.
“The number one thing you can do to avoid issues is to take prompt action,” Flaks said. Immediately alert local law enforcement to any issues, and don’t try to force the individual(s) to leave. To keep squatters from taking over the property, make it look occupied by running a sprinkler system or having motion lights and security cameras installed. And, of course, make sure all doors are locked and land access is closed off.
If you have state-specific questions, contact local authorities and seek legal representation, Flaks said.