As a lawyer, it is easy to think that your grasp of the law will make it difficult to deceive you. Unfortunately, however, fraudsters are everywhere, and if you are not careful, both you and your clients may fall victim to a fraudulent real estate deal. Here are five potential warning signs of fraud you should watch out for when you are assisting clients with their real estate transactions:
- They want you to rush the deal
- A common aspect of fraudsters is that they exploit the “fear of missing out,” by offering a tantalizing-seeming deal and pushing you or your client to take it while it is available. Often, they emphasize the idea that the property will not be available long, or they imply that other buyers are already lined up if your client does not want to take the deal. This is all meant to keep you from doing your due diligence in investigating them or their property, which would reveal their fraud.
- They demand money up front to secure a property
- Rather than pushing you to take a bad deal, some fraudsters will simply seek money up front, before your client has even agreed to the purchase. This may be described as a “down payment” towards the house, or they may couch it as “covering transaction costs.” If you do not already have these terms already set in writing, however, you should look on these attempts to get money with suspicion.
- They cannot provide documentation on request
- If there is one thing to be said about real estate, it is that it is usually very well-documented. That is why you should look at it as especially suspicious if someone is unable or unwilling to provide necessary documentation, such as the property’s deed or financial documentation for a mortgage, on request. The more they delay or try to pressure your client into a deal without these documents, the more likely you are to be dealing with fraud.
- They ask for money to be paid directly
- Every real estate lawyer worth their law degrees knows that most real estate transactions are conducted via escrow, rather than having one party agree to pay the other directly. This helps to protect the buyer’s money from going to someone until all the conditions of the sale have been satisfied, protecting against potential fraud. This is also why you should always be suspicious of anyone who wants money to be wired directly to an account, rather than going through the escrow process.
- They tell your client not to talk to anyone else
- Finally, you should always be alarmed if the other party in your real estate transaction tells your client not to talk to other people, including their lawyer. As a lawyer, this should be a serious red flag that you are dealing with a potential fraud, and you should do your best to keep your client away from such transactions. However, even if you are cautious, it is still sometimes possible to be pulled into a fraudulent transaction, which is why title insurance is essential.
If you are an attorney assisting a client with a real estate transaction, you should contact the title insurers at Habitat Abstract. Our experienced staff will assist you with obtaining a title insurance policy that protects your clients and prevents unforeseen issues related to a defective title. Contact us at 1-888-99-TITLE (1-888-998-4853) or visit our contact page for more information.
