As real estate attorneys and licensed Ohio title insurance agents, we must constantly be on the lookout for the latest scheme to defraud buyers, sellers, lenders and others in real estate transactions. We have already written about ever-persistent attempts at wire fraud. (This one is never going away, we fear.) But yet another fraud that is borne from the bountiful information available on and the anonymity of the internet is on the rise: Seller impersonation schemes.
According to one of our underwriters, First American Title Insurance, Seller impersonation schemes have increased 73% in 2023. We personally have seen this attempted — but caught — to two separate commercial Realtor clients.
Here’s how the scam works, according to First American:
- Scammers search public records to identify real estate that is free of a mortgage or other liens. These often include vacant lots or rental properties. The identity of the landowner is also obtained through these public records searches.
- Scammers pose as property owners and contact a real estate agent to list the property for sale. All communications are through email and other electronic means and not in person.
- The listing price of the property is typically set below the current market value to generate immediate interest in the property.
- When an offer comes in, the scammer quickly accepts it, with a preference for cash sales.
- The title company or closing attorney transfers the closing proceeds to the scammer. The fraud is typically not discovered until the time of recording of transferring documents with the applicable county.
The natural reaction of a Realtor or buyer is: “that it’s the job of the closing attorney or title agent to ascertain the true identity of the seller,” but in the cases of limited liability companies and corporations, there typically is no public information at all (including the Secretary of State’s records), to ascertain the true owners and officers of these entities. In the case of individual sellers, if they are shipping to Ohio a notarized deed signed out of state, it is possible that no one even asked for their I.D.
Thus, not only is it not negligence on the part of the attorney or title agent to fully ferret out the “authority” question, it’s something that’s not even possible in many instances. In short, it’s one of the inherent risks in real estate transactions.
Thus — and it sounds self-serving to say this, but it’s true — one of the only sure ways a buyer can protect himself against his scam is to purchase an Owner’s Policy of Title Insurance at the time of the acquisition. (And, no, simply buying coverage for the lender is simply insufficient — it is in fact NO COVERAGE AT ALL for the buyer). In the above scenario, a non-fraudulent buyer who purchases an Owner’s Policy is covered if they fall victim to this scam.
We are tremendously proud of the title presence we have in Ohio and Kentucky through Ivy Pointe Title. Our residential division headed by Rick Turner (513.943.5660), and our commercial division headed by Eli Krafte-Jacobs (513.797.2853) are — as our tag line says — “accurate and on time, every time.” They are here to protect you from these kinds of scams and schemes. Let us know how we can help you safely close your next transaction.