How Can You Guard Against Real Estate Fraud in California?

Real estate fraud is very common because many people do not understand the consequences of signing deeds, or their signatures may be forged.

Lawsuits that include causes of action for fraud, quiet title, and cancellation of deeds can often provide remedies for fraud, but they can be expensive and require significant time to resolve.

As in most cases, avoiding fraud is the best way to prevent the adverse consequences for both young and older persons.

In a recent Consumer Alert from the Department of Real Estate, the California Department of Real Estate (DRE) provided valuable information to guard against real estate fraud.

The California Department of Real Estate (DRE) encourages seniors (but younger persons are also vulnerable) to be aware of real estate and mortgage fraud targeting older adults. Scammers increasingly target seniors with real estate and mortgage-related deception, exploiting their trust and financial vulnerability.

The following tips aim to help Californians safeguard themselves before harm is done, as well as how to report this type of fraud. 

Fraud Avoidance Tips

1.   Be vigilant, diligent, and suspicious, and proceed very cautiously, when contacted by strangers. 

2.   Use only DRE licensees when engaging the services of people or companies offering rental, home loan, foreclosure rescue, or other real estate services on your behalf. 

3.   Never pay in cash, or wire cash to anyone, in connection with real estate transactions; Also, be certain to protect your personal information, such as social security number, so scammers cannot steal your identity. 

4.   Never pay anyone for home loans or foreclosure relief services in advance of successfully completing the work you wanted them to do for you. 

5.   Never sign an agreement for a real estate transaction (including a Rental) or a home loan that you cannot afford. 

6.   Never sign a real estate (including Rental) or home loan agreement that you do not understand or have not read, or which contains blank spaces. 

7.   Anyone (including scammers without an appropriate or legitimate California license) can advertise on television or radio, in newspapers, magazines or on the Internet. 

8.   Just because someone looks professional, sounds like an expert, and/or gives you confidence in their real estate knowledge, does not mean that you can or should trust them.

9.   Never transfer or sign your home over to any third party or anyone else who claims that such a transfer can or will help you repair your credit or keep you in your home. Also, never sign a “power of attorney” giving rights to your property or money to any individual – or any company – you do not personally know and trust. 

10. Monitor and periodically check the title to your real estate holdings, just like you check your credit reports; and act immediately if you detect fraud. 

11. If something sounds too good to be true, it probably is! 

Current Types of Real Estate Fraud 

Foreclosure Rescue Schemes 

Scammers promise to save a homeowner’s property from foreclosure in exchange for fees or title transfer. Victims often lose both their homes and money when no real help is provided. 

Unlicensed Prepaid Rental Listing Services Fraud 

Scammers offer rental property lists for a fee without proper licensing. Victims often pay upfront but receive outdated or nonexistent listings, leaving them without a rental and no recourse. 

Timeshare Resale and Rental Schemes 

Fraudsters promise to sell or rent timeshares for a fee but either fail to deliver, exaggerate property value, or sell nonexistent interests, exploiting owners’ desire to liquidate or monetize their timeshare. 

Online Rental Fraud 

Scammers advertise fake rental properties online, often requesting deposits or personal information before disappearing, targeting people searching for homes or vacation rentals. 

Unlicensed Property Managers 

Individuals manage rental properties without the necessary real estate license, potentially leading to mismanagement, legal issues, or financial loss for property owners and tenants. 

Real Property Recordation Fraud 

Fraudsters forge or falsify deeds and record them against properties without the owner's consent, potentially leading to disputes over property ownership. 

Real Property Investment Schemes 

Scammers promote high-return real estate investments that are either nonexistent or misrepresented, leading to financial losses for investors. 

Reverse Mortgage Scams 

Fraudulent schemes target seniors, offering reverse mortgages with misleading terms or fees, potentially leading to loss of home equity or foreclosure. 

How Consumers Can Report Suspected Fraud

If you believe you may have been “scammed” or a victim of real estate fraud, you should reach out to local law enforcement. To report a concern or complaint about a real estate salesperson or broker, you can file a complaint with DRE: https://dre.ca.gov/Consumers/FileComplaint.html

LESSONS:

1.         Be very careful when signing real estate documents, and do not hesitate to consult with a real estate attorney to understand the documents and their consequences.