By Jeffrey L. Boney
(Source FT Forward Times):
Shining the light on the ever-increasing crime of seller fraud, deed fraud, and seller impersonation
Imagine sitting at home or working at the office, minding your own business, when suddenly you receive a disturbing phone call informing you that not only is someone impersonating you, but they are also in the process of trying to sell your land without your consent or knowledge.
Believe it or not, deed fraud and land theft is very frequent in Harris County, and it happens more often than you think. As a matter of fact, it recently happened to someone very close to the Forward Times newspaper—its very own owner, Karen Carter Richards.
Earlier this year, a realtor came by Karen’s home on a Friday afternoon looking for her, but she was not home at the time. Fortunately, her son and his wife happened to be at her house that day. Once the realtor determined that he had indeed found “the real Karen Carter Richards,” he immediately informed her son that her property was set to be sold on Monday morning for $235,000. Yes, you read that right. Her property was set to be sold in a few days!
An imposter was seeking to hijack Karen’s property right from under her nose.
Karen eventually spoke with the realtor about her property over the phone and was told that the title company they had been working with on a land transaction involving her property made him aware of some serious red flags relative to the deal. They encouraged the realtor to locate “the real Karen Carter Richards,” because several things seemed abnormal and weren’t adding up.
Some of the red flags that gave the imposter away to the title company included them: not being able to provide key information and documents when asked; constantly telling the title company they couldn’t find certain requested items and were looking for them; trying to sell the property under market value; wanting to do a quick sell; and not wanting to come into the title company to sign important documents.
Once notified about the imposter and the suspected land fraud, Karen immediately contacted real estate veteran Gerald Womack at Womack Development & Investment Realtors, who handles all of her real estate properties. He spoke with the title company and the realtor and worked with them to put a halt to the fraudulent real estate transaction and prevent a catastrophe.
Gerald Womack
The case was then turned over to the Harris County District Attorney’s Consumer Fraud Division, who has been in contact with Karen multiple times. They discovered several fraudulent documents that had been created, where her signature was forged on them. Karen also filed a police report with the Houston Police Department (HPD) and investigators have been working with the Harris County District Attorney to bring criminal charges against the imposters.
The entire ordeal was extremely unsettling for Karen, who doesn’t know how something like this could have happened to her, let alone anyone.
“I was shocked that this could happen to a vacant piece of property that my family has owned and paid taxes on since I was a teenager,” said Karen. “This has never happened to any of our properties. I have learned that vacant land is a target, so I would encourage anyone to make a point to check on their property more regularly. These people had a For Sale sign on my property, but because I rarely go over there, I didn’t know.”
Womack states that outside of Karen’s situation, he recently has had two other instances where this occurred. In the first, the seller was alerted directly by the listing agent after she failed to show up to the closing. In the other instance, Womack states that he was pulling information for a client on their property and noticed that it was listed for sale online and was pending. When he brought it to the owner’s attention, the owner thought Womack was mistaken until he saw it for himself. Womack then contacted the listing agent and was able to get it pulled from the market.
Neither property was sold.
Womack believes that the only way this type of crime works is under anonymity.
“Historically, a seller will meet with a real estate agent in person and list their property,” said Womack. “We have become an email and text driven society and thus these criminals are able to carry out this scheme by creating fictitious email addresses, temporary phone numbers, and mobile applications, which provides them ways to text from untraceable numbers.”
Womack states that when he is made aware that a property owner may be subjected to some fraudulent activity, the first thing he does is have them contact the listing agent who is marketing the property and get the information of the title company. He also advises anyone in this situation to alert the local authorities to file a police report.
“In my experience, this crime is generally only done with vacant land, but that is not to say it could not happen on inherited property, abandoned property, or run-down property either,” Womack emphasized. “Property owners need to routinely check their respective county appraisal’s website to confirm there has been no change in ownership. I would also suggest that they visit their property, especially if it is not where they reside, to ensure no changes have been made without their knowledge.”
Valerie Turner currently serves as Assistant District Attorney and is the head of the consumer fraud division at the Harris County District Attorney’s Office. She wants the public to know that the likeliest victims are people who don’t use a title company to close a land transaction.
“Without a title company to check the title history, it is easy for crooks to sell property they don’t own to unsuspecting buyers, who pay good money and expect good title,” Turner says. “If the buyer goes through a title company, purchases title insurance, and then there is a problem, the title company is on the hook to either get the buyer good title or refund all of their money. Of course, if a thief inserts his name into the title history using a forged deed, a title examiner will not catch that because the title company does not investigate beyond the four corners of the deeds. They don’t call the last true owner and ask, ‘Did you sign the deed to the (current seller)?’ They don’t research to find out whether the last true owner was alive at the time of the purported signing of the deed. That only happens once there is a complaint, and our office investigates.”
Turner tells the Forward Times that her office worked in conjunction with the Harris County Clerk’s Office to pass legislation in 2016, which no longer allows a person in Harris County to anonymously file a real property document.
According to Turner, the law now requires that the person present photo identification, which is then scanned in by the clerk. That information is not made public, but if a complaint is received and her office investigates, they can ask for a copy of the photo identification. This law only is applicable in Harris County, in that some of the smaller counties objected to such a requirement.
The areas in Harris County that most often see this kind of theft are neighborhoods with abandoned houses. The crook can change the locks, file a deed inserting him into the chain of title, and put up a sign advertising the house as for sale. Then they give the unsuspecting buyer a deed once payment is made in full. Because the buyer received the property via fraudulent deed, no ownership was conveyed. According to Turner, the Sunnyside community in southeast Houston is a neighborhood where deed fraud occurs frequently.
Turner states that a property owner might only find out this has happened to them if they were to drive by their property or their house and see that it is occupied. She states that the owner might also check the Harris County Appraisal District’s (HCAD) website, especially after not receiving a property tax bill for some time, and learning that the property is now in someone else’s name.
“To avoid falling victim to this crime, owners should check the HCAD website once a year to make sure the property is still in their name,” says Turner. “Also, they should make sure they receive their property tax bill. Buyers should always close with a title company. That way, if something goes wrong, they are protected. Another option would be to purchase deed fraud insurance. Homelock and other companies sell this product. I don’t know the details of the policy though. I’m not sure if they just alert the owner to the fact that the property has been taken out of their name, or whether they insure the value of the property if a sale occurs without the owner’s consent.”
Unfortunately, Turner states that if someone impersonates an owner and sells their property, which is most often what they see happen at title companies, the owner is often out of luck if the sales proceeds are actually sent to the land thief by the title company. But, Turner indicates, in a case like that, they are usually able to trace the money to an account and investigate from there.
“If a thief files a forged deed, and sells the property that way, then there will be a cloud on the title and the true owner will not be able to sell the property,” Turner emphasizes. “If the true owner does not want to sell to the unsuspecting buyer, then they will have to hire an attorney to file a suit to remove the cloud from the title. If the unsuspecting buyer contests the matter in court, it could cost up to $50,000 or more to correct the situation. The true owner could file a lawsuit against the title company for not confirming the identity of the seller. I don’t know how successful that would be, though.”
According to Turner, these incidents are criminal in nature, and the Harris County District Attorney’s office often files the following charges: Aggregate Theft, Forgery, False Statement to Obtain Property, or Securing Execution of a Document by Deception.
Turner states that if the land thief is caught and identified, prison time is a possibility depending on that person’s criminal history and their ability to pay restitution.
“If the thief has a prior felony conviction and served prison time, it is doubtful we would offer probation, so prison time would be more likely,” says Turner. “If there is a significant amount of restitution owed due to a defendant’s actions, then a requirement would be for the person to pay a substantial amount of restitution upfront and show an ability to pay the remainder of the restitution. If they can’t do that, then prison time will be our offer.”
Turner states that the amount of prison time a land thief serves is dependent on the facts of the case, the number of properties stolen and their values, and the defendant’s criminal history.
“If we file Aggregate Theft for stealing from a true owner and unsuspecting buyer (or more than one of each), then the amount of the theft can go up rather quickly,” says Turner. “If the total amount stolen is over $300,000, then the punishment range (assuming no other prior felony convictions with prison trips) is 5-99 years or Life with the possibility of a fine up to $10,000. I’ve had land thieves sentenced to probation and others sentenced to 28 years, 40 years, etc.”
The Texas Real Estate Commission has been assisting the Texas Land Title Association in educating real estate license holders on trending fraud schemes.
The Texas Land Title Association has reported seeing more people fall victim to seller impersonators, with the prime target properties being vacant land or investment property such as vacation homes, second homes, rental properties, and any other instance where the tax mailing address is different than the property owner’s address.
According to the Texas Land Title Association, a typical scenario involves an impersonator calling a sales agent for a property to be listed below market value, so that the potential buyer thinks the purchase is a bargain, and then to lure the agent into taking the listing, the imposter might say something like:
“This is a quick sale.”
Not only are land and property owners susceptible to this type of activity, but realtors are also at risk of representing someone who is not the rightful owner to the property they are trying to sell.
“This type of fraud is terrifying because of how much it has increased and how quickly,” said David Tandy, chair of the Texas Land Title Association’s Seller Impersonation Fraud Task Force. “Until that real seller decides to do something like refinance or sell the property, they are not aware of the fraudulent transaction involving their property. And by that point, the duped buyer has lost all their money, the real estate agents have lost their commissions, and the entire transaction is void.”
Realtors can be a huge part of the solution if they know what red flags to look for and understand how important their role is. Those red flags include:
The property in question involves vacant land or an owner not living on property.
Imposter Seller wants a quick sale.
Imposter Seller wants a cash sale.
The property is listed below market value.
Imposter Seller only wants to communicate by email or text and does not want to meet in person.
Imposter Seller’s phone area code is unrecognizable or foreign.
Before listing a property, realtors should make sure the property owners are verified by getting a copy of two forms of identification, asking for a recent utility bill, and asking questions about the property that only the true owner would know.
“This just suddenly exploded. We’ve seen similar forged deed fraud in the past, but this new type of fraud is just pervasive” said Leslie Midgley, executive vice president and CEO of the Texas Land Title Association. “These criminals are highly sophisticated with their schemes and hard to detect if you aren’t vigilant. Title agents and underwriters have implemented many best practices to try and shut these transactions down, but there is much work to be done as significant losses have already occurred and the criminals seem to be increasing their efforts, not retreating.”
If you, or someone you know, are the victims of land fraud, please contact local law enforcement, report it online to the Federal Trade Commission at https://reportfraud.ftc.gov/#/, and if you are in Harris County, reach out to the consumer fraud division at the Harris County District Attorney’s Office at (713) 274-5555.
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