Seller Impersonation Fraud

Real estate transactions continue to be a prime target for fraudsters searching for financial gain. According to a joint security advisory issued by the U.S. Secret Service and CertifID, there has been a significant uptick in seller impersonation fraud across the nation, particularly involving vacant land and unencumbered property. A recent survey conducted by CertifID reported that 73 percent of real estate firms saw an increase in this type of fraud attempt as of May of this year.

At Surety Title, we take protecting property rights seriously and understand the importance of providing information that prevents bad actors from succeeding. To help mitigate the possibilities of falling victim to seller impersonation fraud, we have outlined how the scheme works, potential red flags to look for and some precautions to take.

How the Scheme Works

The fraudster searches public records to identify property that is free and clear of a mortgage loan or other liens, mainly targeting vacant land and rental properties owned by foreigners or the elderly. The fraudster then poses as the property owner and uses an internet request, email or text message to hire a real estate agent. The property is generally listed below market value with a request for an all-cash buyer and a quick closing.

When it comes to scheduling a signing appointment, the fraudster offers an excuse for not being able to sign documents in-person and requests to use a mobile notary. Then, impersonating the notary as well (or with the help of a co-conspirator), the fraudster delivers falsified documents to the title company or closing attorney. Once the transaction closes, the buyer’s funds are unknowingly wired to the fraudster’s bank account. The discrepancy in ownership is often not discovered until documents are recorded with the county clerk’s office, or months or years after the transaction has closed.

The Red Flags

Fraudsters use various tactics to commence seller impersonation fraud. It’s important for industry professionals to remain vigilant and use scrutiny during the entire real estate transaction. Here are some potential red flags to look out for:  

• Communication is strictly via email or text. The seller uses a multitude of excuses not to have an in-person meeting or video chat.
• The seller has no documentary evidence linking them to the property.
• The seller provides a different address than the property address or tax mailing address.
• The seller wants to list the property below market value and to only accept offers from all-cash buyers.
• The seller advises the real estate agent not to post a “For Sale” sign on the property.
• Persistence about a quick closing, even willing to offer incentives or cut corners to close sooner.
• Demands to use their own notary (to provide falsified documents to the title company or closing attorney).

Precautions to Take

To help combat the risk of becoming a victim to seller impersonation fraud, consider taking the following precautions throughout the real estate transaction.

• Ask the real estate agent if they have met the seller in person or have otherwise verified the identity of the seller or used a third-party vendor to verify their identity.
• Ask questions to learn the seller’s knowledge of the property that is not readily available in public records.
• Mail a letter to the owner of the property at the address listed on tax records.
• Contact the owner at an independently discovered and validated phone number.
• Require notarization from a vetted and approved notary. If remote online notarization is not available in the state where the property is located, the title company or closing attorney should arrange the notary appointment.
• Compare the seller’s signature to the signature of the owner shown on other recorded documents.
• Follow your instincts, as they are generally the number one indicator of suspicious activity.

Protecting Your Title Rights

Property owners may be able to establish additional protections against seller impersonation fraud by signing up for free property monitoring services if this service is offered by their local county recorder’s office. The service notifies property owners when documents have been recorded against their property and may include fraud notifications.