As the worldwide recession stands on the brink of a possible period of stabilisation, and potential recovery next year and beyond, there is no doubt that many people in the property market have had their fingers severely burnt during the downturn. However, authorities around the world are reporting a substantial increase in the number of property scams as far afield as Sacramento, California to Glasgow in Scotland. So what are the scams and what do we need to look out for?
There are many scams appearing on a regular basis and worryingly it is the Internet which appears to be a common denominator throughout them all. Here are a number of property scams to look out for:-
As the number of websites advertising properties for rent continues to grow we have seen the emergence of a worrying scam which has become widespread. A perfect example of this particular fraudulent activity emerged in Glasgow, Scotland when a lady was sent two e-mails advertising the potential letting of the same flat in Glasgow city centre.
The scam is very simple as the e-mails, which contain pictures of the property, also come with a very attractive rental agreement. The first few e-mails you receive, the e-mails in this example were received from Denmark, will be fairly “soft” and attempt to get you on-side for a potential transaction. However, after gaining your trust and engaging in substantial e-mail correspondence you will then be asked to clarify your financial position which will eventually lead to a request for a deposit.
Many people have confirmed that deposits of as much as three months rent have been requested and many have sent these payments off to the “property owners” only to find they never owned the property in the first place. When you consider that each potential victim has been asked to send anything up to £1000, the potential income from this particular scam is enormous. As property scams go this one takes some carrying off!
Always ensure that you are corresponding with the owner of the flat and it is vital that you gain access to the property to check that everything is as it should be. Sending money off to third parties without confirming who they are and whether they actually own the property is a recipe for disaster.
Property assessment scam
The property assessment scam is one which has been ongoing for some time and is more common in America than anywhere else. Reports from Sacramento, California suggest that a new wave of property assessment scam letters have been sent out to properties in the region.
In effect this particular scam is targeted at homeowners and contains a completely legal offer to reassess the value of your property with the indication that the owner may have been overtaxed by the authorities and could be due a rebate. However, this is when the scam starts to hit home as costs for filing the documentation and “late fines” appear from nowhere. Many homeowners, attracted by the possibility of a tax rebate, and a reduction in their future property tax, have sent off thousands and thousands of dollars to these unknown third parties and surprise surprise the report never appears!
The authorities in America will reassess your property tax band free of charge which effectively negates the need for these third parties to become involved. The authorities are having difficulty stopping the scam at source because the original letters which are sent out are perfectly legal, although obtaining funds by deception, i.e. never forwarding a report, is against the law. You should never have to pay for a reassessment of your property tax!
As you might expect where significant amounts of money are available, crooks and fraudsters find many ways around the various legal systems. One particular scam which is very popular in America involves the “artificial transfer” of a property in to a third party’s name using very simple stationery and information which is in the public domain.
The authorities in America have reported a significant increase in such scams whereby perfectly legitimate looking deeds of transfer have been presented at the Recorder’s Office and change of ownership noted. The quirk in the system is the fact that the “real owner” does not have to sign any documentation to transfer the property to the fraudster so many homeowners and property owners will never be aware that the ownership of their property has changed.
Once the property, whether this is a house, business office or a derelict building, has been registered in the name of the fraudster they will then be able to take out a mortgage using the property as collateral. Once in possession of the cheque they will disappear and no repayments will be made towards the loan which will eventually see the financial institution involved take out a foreclosure notice. In America it is up to the owner of the property to prove that any transfer was “fraudulent” and if they are unable to prove this there is every chance they could lose their property.
It is vital that you check the relevant ownership documentation regarding your property on a regular basis to see that no mistakes have been made and no fraudulent activity has been carried out. While the chances of being caught by this particular scam are remote, a number of homeowners have literally been left destitute after thieves took out substantial mortgages against their property and disappeared.
Don’t fall for property scams
While it is not only the property sector which is attracting more and more scams in light of the worldwide recession, the figures involved in mortgage fraud in particular are substantial enough to see crooks and criminals move off the streets and into cyberspace. It is vital that whether you are looking to rent a property, or already own a property, you ensure that the paperwork and proof of ownership are in order.
There are many warnings regarding the use of the Internet when facilitating third-party payments and you should only use trusted and approved sites which are monitored and well policed. As ever, if it looks too good to be true then the chances are it is too good to be true!
Are there any other property scams you are aware of?