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Seller Fraud Risks Are High Especially Before the Holidays – Stay Vigilant
For lawyers handling real estate closings, it’s important to know that seller fraud continues to rise, especially with the upcoming holiday season when distractions are high, and fraudsters are active.
Recent claims emphasize the increased risk of fraud in transactions involving vacant land and note that fraudsters exploit short work weeks and holiday periods to execute schemes. With Thanksgiving approaching, the final business day, Wednesday, November 27, presents an opportune time for fraudsters to manipulate closings and reroute funds beyond recovery.
Preventive measures include:
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Verify Tax Records: Cross-check the seller's provided address against the property tax card. Be suspicious if the seller in your transaction is giving you an address different from the one on the tax card. Discrepancies warrant further investigation.
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Scrutinize Banking Details: Be cautious if the seller’s bank account is outside of North Carolina or the state of the property's registered address.
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Confirm Notaries: Verify notary credentials with state notary offices. Fraud indicators include mismatched states for the owner's residence and the notary's location. If the state in which the owner is confirmed to live is different from the state in which the notary is located, assume there is fraud and do further investigation.
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Safe Harbor Compliance: Follow all safe harbor guidelines outlined in the financial fraud exclusionary endorsement.
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Collaborate With the Real Estate Agent: Communicate with the seller’s real estate agent or even better directly with the seller to confirm seller details.
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Be on the lookout for seller-imposter fraud: Keep it S.I.M.P.L.E. with this resource shared by Investors Title.
Fraudsters often strike before or on Fridays, especially leading into holiday weekends. Law firms, particularly solo or small practices, should double-check and verify closing instructions, wiring details, and other critical transaction components during this high-risk period.
Stay alert and protect your clients by adopting these precautions.
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