Aug 17, 2021

2021 Real Estate Scams & Fraud

Scams, fraud, breaches, and phishing are everyday concerns for today’s title companies. Financial and privacy threats continue to evolve in 2021 and increased with the pandemic. Not only do these cost the title company time and money, but they also create additional hurdles for buyers, sellers, brokers, agents, and lenders.

Texas and California lead the country in monetary losses reported to the FBI due to scams. Let’s take a look at some of the biggest threats we’re seeing right now and what you can do to protect yourself and your clients.

Data And Information Breach

A data breach can be where so many problems begin. This is when your private information is stolen. Make no mistake- this is a sophisticated multi-billion-dollar business run by smart professionals who are very good at what they do.

The criminals are not usually stealing this information from the title company. They’re getting it from individuals like you. This is typically a clever manipulation of the natural human tendency to trust. Once the criminal has your private information, they may hack into or monitor your computer to get your login and/or passwords to accounts. They may intercept emails and download viruses or ransomware.

Your phone and computer are the biggest risks for a breach. Do you have sensitive or irreplaceable information on your computer or phone? Most people do. Do you back them up regularly? Most people don’t. Most computer users do not have even basic cybersecurity. Scammers know this. You might as well be falling for the Prince of Nigeria scam.

A scammer can use your information to impersonate or manipulate you or your accounts. Their next step is to gain access to your information and/or computer, monitor your activity, and ultimately steal money. In a real estate transaction, they can attempt to divert buyer down payments, earnest money, mortgage payoffs, seller proceeds, etc.

Almost 97% of breaches start with emails. The most powerful way to avoid this is to be wary of every email you receive. Establish strong passwords and change them every three months. It doesn’t matter if you rotate using names of state capitals, vegetables, car models, months, … Just get a system of changing them that works for you. Only use secure Wi-Fi connections and avoid all free Wi-Fi connections in public locations for both your computer and your phone.

Wire Fraud

A 2021 survey by the American Land Title Association reports that one-third of all title company transactions have experienced a wire fraud attempt. Wire fraud is carried out by criminals who impersonate escrow officers, real estate agents, or lenders. They persuade home buyers to wire funds into their accounts during the closing process. These scams are very clever and are often carried out by criminal organizations with untraceable offshore accounts. The FBI estimates that only 12-15% of wire fraud is reported.

Wire transfer crooks hack legitimate emails or send buyer emails posing as someone involved in the transaction. They monitor a pending sale, and when the closing date nears, they send the buyer instructions to wire the closing funds to their fraudulent account. This scam is so lucrative that the fraudsters even set up fake websites that look similar to the title company or lender you’re working with, making them seem legitimate. They may create an email address that appear familiar, but one number or letter is off. It’s easy to miss the small inaccuracy or misspelling.

Always be suspicious of any email or text requesting a change to wiring instructions. Before sending money, go back to the original documents you received from your title company and call the phone number listed there to verify the wiring instructions.  Never click on links or send money without verifying wire instructions with a live person. Pick up the phone and only call the number that you first received from that contact (not the latest email).

Check Fraud

The frequency of fraudulent and counterfeit cashier’s checks is rising. A fake cashier’s check may clear immediately when first deposited. However, when the bank determines that the check is fraudulent, they take the money back.  This can happen days or weeks after the deposit.

Many title companies now treat a cashier’s check similarly to a personal check and require buyers to wire money to them if the amount is substantial.

… And More

There are a lot of real estate scams that we only hear about in title company offices. Rip-offs like roofer scams, fake rental house cons, moving company swindlers, etc. happen every day. The pandemic has led to a rise in cons like foreclosure relief scams that claim they can help homeowners save their homes and reduce their mortgage payments for an upfront fee. They sometimes claim to be affiliated with a government agency or housing assistance program. Remember, these guys are pros at ripping people off, and their methods keep getting more creative.

Unfortunately, buyers and sellers are the targets of scammers, and the losses they suffer keep mounting. In the end, only you can protect yourself.

[where: 75230]

Jul 5, 2021

You Can't Take it with you when you Sell

There is often confusion about what a seller can and cannot take from a house when they sell it. Things can get unpleasant and disputes can erupt when all parties are not clear.

Let’s shed a little light on what goes and what stays when a home sells in Texas.

What conveys?
Paragraph 2B of the standard Texas real estate contract lists specific items that must convey with the property unless otherwise stipulated. These are items that are permanently installed and built-in. They include appliances, window screens, mirrors, ceiling fans, mail boxes, light fixtures, and more.

Paragraph 2C of the contract lists additional accessories that must remain with the property such as fireplace screens, curtains and rods, blinds, fireplace logs, garage door controls, etc.

Whether or not an item conveys with the house can often depend on if it is considered permanently attached or built-in. For example, if a mirror is hanging on a nail in the powder bathroom, it is not permanently installed and the seller may take it. However, a mirror glued to the wall or screwed in by framing is considered attached and remains with the house. A kitchen refrigerator does not go with the house unless it is built-in. If it is built-in, then it must remain.

Mounts and brackets for televisions and speakers are listed in paragraph 2B and must stay put. However, the actual television and speakers do not go with the sale. Outdoor cooking equipment that is built-in must remain, but items like free standing grills do not. Paragraph 2C lists draperies, curtains and rods as items that must stay. All keys plus controls for gates and garage doors must also convey.

What to exclude?
Any items that the seller wants to exclude must be listed on the first page of the contract. I often see a favorite light fixture or specific window treatments listed in this space.

Personal property items belong to the seller and go with the seller. The seller may opt to gift something (like a washer and dryer) to the buyer and the buyer may agree to accept it. If the buyer does not agree to accept it, then the seller must remove all personal property prior to giving possession. A Non-Realty items addendum should be completed by both parties for any personal items transferring from seller to buyer. 

Texans may find it surprising that in some countries, the seller takes everything but the kitchen sink – literally. I’ve seen folks buy a home in Europe and discover that the seller takes all appliances, light fixtures, door knobs, etc. In other countries (particularly resort areas), the seller may leave everything, including the furnishings and dishes.

When in doubt, read the details in Paragraph 2 and put what you want in writing at the time you sign the contract. Then everyone will understand what you can and can’t take with you when you go.
[where: 75230]

Jun 28, 2021

Are Title Records Gender Biased?

When the title to a piece of Texas real estate is held in both a man and woman’s names, the first name listed on the deed is usually the man’s name. The man’s name is then shown as the primary title holder on tax records and legal documents.

One must wonder if this is some kind of antiquated tradition. Or is the system chauvinistic?

The reasoning has nothing to do with gender bias. When the title company receives a contract, they reference the buyer or buyer’s names as they appear on the contract. Whichever name is listed first becomes the first name listed on title documents and on the deed.

However, when the buyer is getting a mortgage for the purchase, the title company must match their documents with the lender’s paperwork. The names must appear exactly the same and in the same order on both the mortgage lien (deed of trust) and on the ownership deed (warranty deed).

Typically, the first person listed on the loan application becomes the first name listed on the lender documents. The mortgage lender will list the new owner names on their mortgage lien to be filed by the title company. The title company will match the names and their order for documents to be signed at closing.

After closing, the title company records the ownership transfer and liens with the county. Tax records are then changed to the new owner names as they were recorded with the county.

The buyers’ names must also mirror their names as they appear on their IDs (driver’s license or passport). If Billy Bob is really William Robert, then that is how his name needs to appear on all purchase documents. Likewise, if Sally Sue is really Sarah Susan, then that is how her name will appear on purchase documents.

Regardless of whose name appears first, in most residential real estate, both owners are considered joint owners with neither of them owning a larger interest in the property than the other. Whose name appears doesn’t really matter.

If it matters to the buyers, then they should discuss it with their mortgage lender and the title company prior to closing.

The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.
[where: 75230]