Real estate fraud is a serious concern that can have lasting consequences. Understanding how fraud works and what steps to take can help you avoid devastating outcomes. At Skoog Law, we’re here to guide you through the process and help safeguard your transactions.
Real estate transactions are some of the most significant financial decisions most people make. Unfortunately, fraudsters target these opportunities, preying on individuals who aren’t aware of the risks involved. Let’s explore the key steps you can take to safeguard yourself and your investments.
Common Types of Real Estate Fraud
Before you can protect yourself from fraud, it’s helpful to understand the various types that can occur. Real estate fraud can take many forms, and recognizing the signs early can help you avoid falling victim to a scam.
Title fraud: This occurs when someone illegally transfers the title of a property without the owner’s knowledge. The fraudster then sells the property to an unsuspecting buyer or takes out loans against the property.
Mortgage fraud: This can happen when false information is provided on a mortgage application, leading to inflated property values or the approval of loans that shouldn’t have been granted. This type of fraud can also involve “flipping” properties by misrepresenting their true value.
Rental scams: Fraudsters may advertise properties for rent that they don’t own, collecting deposits or rent payments before the victim realizes they’ve been scammed.
Phantom listings: Scammers list properties that don't exist or are already off the market. They often ask for upfront payments or deposits to hold the property, only to disappear once the money is received.
Foreclosure fraud: This occurs when a scammer convinces a homeowner facing foreclosure to pay for services that promise to stop the foreclosure, but they fail to provide the promised help.
Being aware of these types of fraud can help you stay alert during any real estate transaction. If you notice something that seems off, don’t hesitate to ask questions and seek legal advice.
Steps to Protect Yourself From Real Estate Fraud
Taking proactive steps is essential to protect yourself when dealing with real estate transactions. Whether you’re buying a home, renting, or investing in property, there are several precautions you can take to safeguard yourself against fraud:
Work with a trusted real estate professional
Whether you’re buying or selling a property, working with a licensed real estate agent or broker can help reduce the risks of fraud.
Verify the property title.
Before proceeding with any transaction, it’s crucial to verify that the property title is legitimate. Title companies and lawyers can help with this process by conducting a title search.
Hire an attorney.
Real estate fraud cases can become complicated, especially when dealing with forged documents or misrepresented facts. An attorney can help you review contracts, manage legal processes, and make sure that your transaction is legitimate.
Check for red flags.
In any real estate transaction, it’s important to look for warning signs that may indicate fraud, such as unusually low prices, sellers or landlords who push for fast decisions, lack of transparency, or pressure tactics. If you notice any of these signs, take a step back and evaluate the situation carefully before moving forward.
Don’t rush into anything.
Fraudsters often try to rush their victims into making quick decisions, hoping they won’t take the time to investigate. It’s important to take your time and make sure you have all the necessary information before committing to any deal. Don’t let anyone pressure you into acting quickly.
Request full documentation.
In any real estate deal, make sure that you receive full documentation regarding the property. This includes contracts, tax records, and property ownership details. If the seller is unwilling to provide full documentation, or if something seems incomplete, it’s a major red flag.
Be cautious with wire transfers.
Scammers often ask for payments via wire transfer, which is difficult to reverse once the money has been sent. If a real estate transaction requires a large payment, make sure that you are making the payment to a legitimate account and that you are dealing with a verified individual or institution.
Inspect the property in person.
Always inspect a property in person before agreeing to purchase or rent it. This will allow you to verify its condition and confirm that it matches the listing description. If you can’t visit the property personally, arrange for a trusted agent or friend to do so on your behalf.
Avoid paying with cash.
When making a real estate payment, avoid using cash unless it’s absolutely necessary and the transaction is through a legitimate, trusted party. Cash transactions can make it difficult to trace the money if something goes wrong. Instead, use checks or bank transfers for added security and transparency.
Reviewing Real Estate Contracts and Documents
One of the most important ways to protect yourself from real estate fraud is by understanding the legal documents involved in a real estate transaction. Fraudsters often take advantage of people who don’t fully understand what they’re signing. Familiarize yourself with key documents in any real estate transaction, such as:
Purchase agreements: This contract outlines the terms of the sale, including the price, payment terms, and conditions of the property. Make sure to read every clause carefully, especially those that involve deadlines, contingencies, and your rights as a buyer or seller.
Deeds of trust: This legal document is used when a buyer takes out a mortgage. It outlines the terms of the loan and the property’s title, and it's essential to review the terms to make sure they’re fair and clear.
Lease agreements: If you’re renting, the lease agreement is a crucial document. Make sure that it outlines all terms related to rent, security deposits, property maintenance, and your rights as a tenant. Be cautious if anything seems vague or if the landlord is unwilling to discuss details.
Title reports: A title report is an important document that proves the property’s ownership. It also identifies any liens or claims against the property. Always review this document to make sure the property is free from legal issues.
Inspection reports: These documents detail the condition of the property. They can uncover hidden problems like structural damage or plumbing issues, which may impact your decision to buy.
What to Do If You Suspect Real Estate Fraud
Even with all the precautions in place, fraud can still occur. If you suspect that you’ve been a victim of real estate fraud, it's important to take action immediately.
Contact your attorney: Your first step should be to contact a lawyer experienced in real estate fraud cases. They can advise you on your options, whether that’s filing a lawsuit or seeking compensation.
Report the fraud: Real estate fraud should be reported to local authorities, such as the police, or to the appropriate regulatory agencies. You may also want to file a complaint with the real estate commission or other governing bodies in your state.
Contact your financial institution: If you’ve made a payment and suspect fraud, contact your bank or financial institution right away. They can assist with freezing the transaction or investigating potential fraud.
Gather evidence: If you suspect fraud, gather as much documentation as possible. This includes emails, contracts, payment receipts, and any other records that may support your case.
Schedule a Consultation
If you suspect you’ve fallen victim to real estate fraud or are looking for advice on protecting yourself from fraud, we’re here to help. Our firm is committed to helping clients protect their real estate investments and resolve legal issues related to fraud. Contact us to discuss how we can help you safeguard your interests.
