Seller impersonation fraud: What Texas realtors, property owners should know
Land-selling fraud in Texas
FOX 7 Austin is following up on a story about land-selling fraud involving property owner impersonations. 7 On Your Side reporter Carissa Lehmkuhl reports on what the red flags are to watch out for, the precautions to take, and what happens if a fraudulent sale actually goes through.
AUSTIN, Texas - Investment property and vacant land can be a prime target for a growing type of fraud that’s been occurring in Texas and around the country.
As chair of the Texas Land Title Association’s Seller Impersonation Fraud Task Force, founded in 2023, and CEO of Texas National Title, David Tandy has observed fraudulent attempts firsthand.
"Just last week I had 10 notices from title insurance underwriters alerting me that they have been told about or seen or are involved in a seller impersonation fraud," said Tandy. "That's a little more than normal, but for the last two and a half years I've been getting two to three a week."
He said fraudsters have seemed to move from forging actual documents to a method that may take a little less leg work.
"Now, it's more of an identity theft crime," said Tandy. "If you impersonate the seller and list the property, and you're able to get through the closing process, you walk away with the sales proceeds."
Recently, FOX 7 met with Joe Grasso, a local property owner, and an Austin realtor, Manny Arce, who was able to flag a fraudulent seller of Grasso’s Hill Country property before it was too late.
"All realtors need to take lessons from that and say, ‘I need to do more to make sure I know the person,’" said Tandy.
Precautions a realtor should take include meeting the seller in person and looking them up on social media. These measures can protect not only the property owner but the realtor themselves from the consequences of a fraudulent sale.
"The title company will contact the agent involved and say you need to refund your commissions," said Tandy. "So agents that missed it, that were involved in it, it's good for them to realize they should take extra care. Because when it starts unwinding, they're going to write a check."
Tandy said the most important measure buyers can take is obtaining title insurance.
"That policy is made out to them and protects them from all kinds of ownership issues," said Tandy. "That's number one, and it actually is protecting the seller in an indirect way."
Otherwise, buyers' funds could be lost if a closing occurs.
"So now you go before a judge and an attorney would prove that it was a fraudulent-forged deed, and the court would issue some kind of court order that would clean up the record," said Tandy. "The property owner is now restored back to owning that property, so a court can take care of it, a title company can take care of it, there's a solution there. That transaction was void."
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For property owners, Tandy suggested setting up a listing alert on Zillow, Realtor.com and other listing websites for the property owner's own address. Property owners can also set up an alert with their county to be notified if any document is filed under their address. Currently, the monitoring service is not offered in Travis County but is offered in more than 40 county clerk's offices in Texas, including Williamson County and Hays County.
Tandy also encouraged landowners to make regular visits to the property and ask neighbors to reach out if a "for sale" sign goes up.
"I've seen people put a sign on their vacant property saying this property is not for sale," said Tandy.
Other possible red flags include a seller wanting to list a property for less than market value, or the seller being located out of state, especially at the last minute.
"Whether you are a property owner, a title company, a lender or a realtor, we all have responsibilities," said Tandy. "Are there red flags and how can we find ways to stop it? How can we find ways to validate the identity of the people that we're working with? And there are new ways coming out now all the time because of all this."
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