LEGAL UPDATE
REALTORS® Warned to Watch for New Scam
Scott Peterson General Counsel of the Colorado Association of REALTORS®
If you believe or are questioning if you were involved in a vacant land scam, FIRST contact the Colorado Burau of Investigations at reportwirefraud@ state.co.us or (303) 239-4201.
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One of the prevailing real estate scams over several years has been the emergence of “wire fraud” in Colorado. Classic wire fraud would target a buyer on the eve of a closing with fake wiring instructions seeming to come from the title company. The unsuspecting buyer would authorize the wire of their closing funds to the scammer’s account (rather than the title company’s account) and – in many cases – the funds would be gone for good. As an industry, we (REALTORS®, title, mortgage, etc.) did a great job of raising consumer awareness of the scam, which ultimately led to the scammers moving along to other states, etc. I still see BOLD-FACED wire fraud advisories on many email signatures…and that is a good thing!
VPVS Scam Basics
Over the past several weeks, a new real estate scam has found its way into the Colorado real estate market. For lack of a better term, I will call it the “Vacant Property/Vacant Seller” (“VPVS”) scam. In comparison to the “wire fraud” scam, this is shockingly simple to perpetuate. As a result, I have been hearing about various attempts of this scam throughout the state in very high numbers.
When the buyer or buyer’s REALTOR® identifies the FSBO listing and contacts the seller, they are told that the property is available and to present an offer. The scam seller is generally willing to work with and compensate the buyer’s REALTOR®. The seller poses as the property’s real owner. Both parties remotely contract to sell the property to the buyer and proceed to a quick, clean closing. The title company opens a file, issues a clean commitment with few requirements (specifically, no loans to pay off ), and performs a “mail out”
Most commonly, this scam requires a vacant property (typically vacant land) that is listed as a FSBO on a real estate syndication website. The scam “seller” will be out-of-state, and the list price will be reasonably low and attractive to a buyer. In order to perpetuate the scam, a few things are typically present: • Vacant land (no property access/ inspection issues) • No debt, loans, or financial encumbrances (clear title with no loan payoffs) • Out-of-state seller (mailout closing) • Cash or relatively quick close (good price/motivated buyer)
