In an aging population, more and more of your clients are likely to be seniors. Unfortunately, you may well run into cases where they’ve become targets of financial fraud. It’s the fastest-growing form of abuse against seniors, with an estimated 40 percent falling victim in any given five-year period, according to True Link Financial, a firm that helps seniors and their families protect against fraud. On an individual level, approximately 1.8 percent of reported fraud cases against seniors result in the victim losing his or her home or another main asset, according to the Federal Trade Commission.
Every state has enacted laws criminalizing financial abuse against the elderly, and because many cases involve real estate, you should be familiar with potentially high-risk schemes. Reverse mortgages, property investment, and foreclosure-rescue offers are areas in which older people are prime targets. But another form of financial abuse—often subtler and more difficult to detect—occurs when a trusted individual exerts undue influence over elderly home owners, convincing them to sell their property, often to devastating effect.
An ill-intentioned adult child may convince his parents to sign their home over to him, and then sell it out from under their feet. Family members or other confidants with a power of attorney may similarly cause harm to the people who trusted them, forcing victims into quick, financially inadvisable home sales and other transactions. If you remain vigilant for the signs of financial abuse, you’ll avoid becoming embroiled in real estate transactions—and possible legal actions—involving criminal or unethical exploitation of the elderly. What can real estate professionals do to help prevent financial abuse against seniors? Here are a few tips for protecting yourself and your clients.
- Document and follow up. When working with an elderly client, take extra care to be sure that the client understands and consents fully to every stage of a transaction. Whenever possible, follow up oral advice or updates with a written recap of the conversation.
- Remember who your client is. Don’t allow yourself to be strong-armed by family members trying to make decisions on behalf of an elderly home owner. Your duty is to work for your client. If a family member claims that he or she must make decisions on behalf of the elderly person due to dementia or other health problems, make sure that an appropriate power of attorney is in place.
- Understand powers of attorney. If a family member or other person claims to represent an elder pursuant to a power of attorney, insist on receiving a copy and provide it to an independent lawyer to verify that it is both legitimate and applicable to the real estate transaction at hand. If it appears that the family member would financially gain from the transaction, especially to the detriment of your client, advise your client to delay the transaction and consult with an attorney to determine the appropriate next steps.
- Educate your team and clients. Brokers should be certain that their agents are educated about real estate–related exploitation of the elderly, and practitioners should talk to their clients about fraud risks. Point them to resources such as the Administration for Community Living, a federal agency that offers support for the varying needs and preferences of older adults. Real estate pros who work with seniors on a regular basis may wish to take continuing education courses to receive their Senior Real Estate Specialist designation.
- Know the signs of elder abuse. If someone’s financial situation suddenly deteriorates, and at the same time he or she becomes emotionally withdrawn or less alert, this could signal that your elderly client is being taken advantage of. The federal Administration on Aging has a wealth of information on how to spot elder abuse.
- Report suspected abuse. As uncomfortable as it may be to get involved, you should report abuse if you suspect it. Your first call will likely be to your local Adult Protective Services agency. Visit aoa.gov for more information about how to file a report.