Notary Fraud / Deed Fraud Alert

By Tiffany Ross- Consumer Resource Officer & Bruce Rinne- Information Officer

Consumers need to be aware that there is now an organized effort of scammers engaging in deed fraud. They create deeds with false signatures of the seller, and have them illegally notarized by someone who is not a notary, or a real notary who was willing to accept a payoff and falsely notarize the document.  These fraudulent documents are being taken to the Registers of Deeds and recorded, transferring the ownership from the unsuspecting rightful owner, to a new owner, who may or may not be a real person.

If undiscovered, this property may then be listed and sold to a bona fide purchaser for value.  If this is the case, the new owner, this legitimate purchaser, is now the rightful owner of the property.  The money has been stolen by the fraudster, and the original property owner has had their property stolen from them.

There is typically nothing that the property owner in a case like this did wrong.  There is nothing they did to cause a scammer to target them, and if they are not made aware quickly enough, they may not be able to take action to stop it.

Many Register of Deeds offices in North Carolina now have a fraud alert that owners can sign up for to receive an email if there is any documentation filed against their property.  If a fraudulent document is discovered, the property owner must take immediate action to try to retrieve rightful ownership of their property.

Actions to Take Immediately:

1. Contact Police and file a police report on the fraud.  Also submit a complaint to the FBI on their website ic3.gov.
2. Contact an attorney to file a lis pendens against the property, to prevent it from being sold to a bona fide purchaser for value.
3. Continue to pay the taxes on the property, so that it will not be sold in a tax foreclosure auction as this would result in a sale to a new owner that could be legitimate.
4. Work with law enforcement and an attorney to locate and serve the fraudulent ‘new owner’ with legal action.  Pursue a declaratory action to declare the newly recorded deed void as a fraudulent transfer.  This would legally return the property to its rightful owner.

If you have not been a victim and would like to know ways to help protect yourself or your property, you may consider registering your property on the Torrens System.  It is a lengthy and somewhat expensive process, but would prevent a property from being able to be fraudulently transferred.

There are other services that claim some ability to assist with protecting your identity/property, that offer monitoring and insurance you can purchase, that can assist you if you have to incur legal expenses to sue to reacquire your property.  Just like any other crime, you should be aware and take precautions to protect yourself and your loved ones as much as you can.  Keeping an eye on your property with the Register of Deeds regularly (some sources recommend monitoring your property weekly) is the best way to prevent yourself from becoming an unsuspecting victim of this type of scheme.

How You Can Protect Your Clients:

1 – Educate them!  The more people know, the more they can be on alert and check on their property more frequently.

2 – Be aware that fraudulent buyers and sellers are on the rise, and brokers must exercise extra caution in verifying both.  Be suspicious of would-be clients that will not meet with you by a video chat or means that will allow you to see and speak with them.

3 – Check the deed and public records for a property your buyer-client is considering purchasing, or that your seller-client is considering selling, to make sure that there wasn’t a suspicious recent transfer in ownership that could be fraudulent.  If suspicious, dig deeper, make efforts to contact the listing agent or seller if not listed, to be certain the due diligence has been performed to properly identify the seller as legitimate.

4 – If you discover that a fraudulent transfer has occurred, assist your client in taking immediate action described above to have the best chance of restoring their property, if they are the seller.  If your client is the buyer, notify the rightful owner of the transfer even if you are the buyer’s agent, as your duty to discover and disclose material facts is to all interested/involved parties, not just your client.

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Rental Fraud Scam Alert

By Tiffany Ross- Consumer Resource Officer & Bruce Rinne- Information Officer

            The North Carolina Real Estate Commission has been receiving an increasing number of calls and emails about fraudulent rental ads attempting to scam innocent people out of their security deposits or application fees. These scam artists can be located anywhere in the world, yet claim they are local property owners. Here is information about rental scams and the Red Flags to alert you of a potential scam.

How You Can Avoid a Rental Scam

            Many rental scams take place on social media.  For example, a fake owner or fake property manager posts on Facebook, Craigslist, Twitter or other social media outlets.  The posts look legitimate and may even have actual pictures of the real property they are claiming to be renting.  In reality, the scammer has no connection to the property or right to advertise it, but the ad will ask for upfront payments to even view the property, or first month’s rent or a security deposit in advance.  They may promise the money will be held in a trust account, and the destination appears to be legitimate, but it really goes to a scammer who is never heard from again.  Being aware of this scam and not falling for these tactics can prevent the loss of hundreds or even thousands of dollars.

Action You Can Take:

1. Never send money to someone online or electronically without verifying it is going to a legitimate place.  Do your research and independently contact and verify that the person who will be holding any money is a real attorney, licensed real estate broker, or the true property owner.
2. Be skeptical of anyone asking for money upfront just to view a rental property.  Make sure that you are communicating with the actual property owner or a licensed real estate broker.  You can look the property owner up in public records for your county (typically through the tax department) and make sure you verify the identity of the person and their contact information.  You can verify someone is a licensed real estate broker by searching the licensee look up page.   From this page, you can verify that their email and other contact information matches the advertisement.
3. Avoid handling any rental transactions over the phone, email or by the internet, including social media.  Make sure that you meet in-person with the owner or their real estate broker, as well as make a physical inspection of the property.  Do not send any money until you have verified that the people and place are legitimate. You can ask to see the broker’s “pocket card” that shows they are a broker, and their driver license.
4. Search legitimate websites, like realtor.com, or actual property management company’s websites for true rental listings by licensed real estate professionals.
5. Search images on the Internet of the owner and broker, and see if they match the person you are dealing with.
6. Look for the Red Flags below and beware of these tactics.

Red Flags That You May Be Dealing With a Scammer

1. They don’t want to meet you in person.
2. The listing has typos or poor grammar.
3. The price is too good to be true.
4. They want you to move in immediately, without even seeing the property.
5. They ask for rent, a security deposit, or other up-front money before signing a lease.
6. There is no screening process.

What To Do If You Are Already a Victim Of a Rental Fraud Scam

            If you have already responded to a fake ad and sent money, only to never hear from the scammer again, you can contact the North Carolina Attorney General’s office to notify them of the scam and provide as much information as you can.  You can also contact local law enforcement (sheriff or police) and submit an internet crime complaint to the FBI to report the scam and see if there is any chance of recovery.

How You Can Protect Your Clients

            If you work in sales and have clients that need to rent before purchasing a home, educate them on these dangers and assist them by looking up properties listed in the MLS or refer them to legitimate property management company websites in your area.  Provide information like this article to help them to avoid the scams and traps, and assist them with verifying property owners through a public records search.  Stay in contact with them, and make sure they are aware of NC Landlord and Tenant laws. They can contact the Commission’s Regulatory Affairs Division at (919) 719-9180 if they have questions or concerns about the actions of a licensed property manager. Or, they can contact the Attorney General’s office (877-566-7226) if they have concerns about the actions of an unlicensed property owner, managing their own property, or other unlicensed property management activity.