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Buying vacant land or unoccupied property? Beware!

Attorneys and closing agents in Florida have recently been experiencing a surge in fraudulent transactions involving vacant land and properties that are not owner-occupied. Title insurers are issuing urgent bulletins and launching webinars to educate attorneys and closing agents in spotting fraudulent transactions before the damage is done. These criminals are slick and savvy, but there are a few questions to ask yourself and your professionals to avoid being scammed:

1. Remember the age-old saying? If it seems too good to be true, it probably is. If a lot is suddenly offered for far below market value, you should immediately question it. Why would a prudent seller be motivated to lose money? Real estate is rarely sold at bargain prices, and ordinarily sales reflect market conditions.

2. Is it a FSBO (for sale by owner)? If you spot a for sale sign on a vacant lot, you should be wary. This is one of the main ways that scammers target unsuspecting buyers. Reports have been made of several buyers entering into simultaneous contracts with one scammer posing as a seller marketing his own property.

3. Is the listing agent from a different area? Local realtors know the customs of their sales territory, and scammers often will choose listing agents from a different area to avoid this familiarity. For example, local realtors will know to check the tax collector’s office, property appraiser’s office and the public records for information on the seller and the property. Many times the property will be free and clear of mortgages, or record title activity will be very remote in time.

4. Does the seller want to close yesterday and for cash? The scammers will often times put immense pressure on the buyer to rush closing, sometimes using personal reasons as an excuse to make themselves appear more credible. Additionally, they will usually only enter into contracts with cash buyers to avoid the oversight of lenders and title insurers, since some cash buyers will forego (albeit unwisely so) title insurance.

5. Is the seller from a foreign country or another state? Dealing with foreign and out of state sellers requires heightened scrutiny. Do any of the professionals involved personally know the seller? Can the listing agent contact the seller by means other than email? Will they do a video call to corroborate their ID? Is the seller from one country and all of the calls and contacts are coming from a different country? Is the seller asking that the documents be signed or funds be wired to a third party or a foreign country other than their country of residence?

6. Are the real estate professionals, attorneys and/or closing agents able to identify the seller? Is the name on the contract spelled the same as the record title holder? Are signatures on documents consistent with signatures on documents in the public record? Has the closing agent sent a letter to the address on file with the tax collector? Does the seller have valid ID? Closing agents should be extremely wary of utilizing foreign passports as means of identification due to the ease of obtaining fraudulent passports. A second form of identification should be secured and the validity of the IDs should be confirmed with the issuing authority.

Think this cannot happen on Marco Island, in Naples or in Collier County? Think again. Many reports of fraudulent transactions have been made locally in the last few months. Thankfully, in most cases the attorneys and professionals were able to catch the scammers before the transactions closed.

There is no way to protect yourself 100%, but using an attorney as your closing agent and securing an owner’s policy of title insurance will substantially reduce the risk of falling victim to the vacant land and absentee property owner schemes.

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