ACAR has been notified of the rise in Vacant Lot Fraud. Please read the information below:
We have been alerted by underwriting counsel and agents in neighboring states about the rise in
number of fraud scams involving vacant lots or unimproved properties. The frauds are perpetrated by
individuals (or entities) posing as the actual owner of these properties, which are targeted due to the
lack of on-site possession by the actual owner. Some common facts involved in these scams include:
• The fraudster identifies an unimproved property that is usually unencumbered and poses as the true
owner/seller of the property.
• The fraudster randomly contacts a real estate agent to list the property in some cases. In other
cases, the fraudster lists the property on Zillow or another similar online real estate service as “for
sale by owner.”
• The owner often lives in a different town from the property, but not always.
• The buyer is often a builder or investor looking for properties to develop. The buyer may be
represented by a legitimate broker/agent.
• The buyer is usually paying cash or obtaining financing from a “hard money” lender that is not a
• The sales price often appears to be below market value and rarely exceeds the tax assessor
valuation; however, this is not always the case so as to not invite suspicion of a deal “too good to be
• Communications by the fraudster posing as the true owner with the real estate agents and the title
company are usually limited to email and text. However, there may also be some communication by
• The fraudster will likely request the closing be a “mail-away” and want to use their own notary.
• The fraudster will often be in a rush, pushy, and aggressive.
• The fraudster will forge the true owner’s signature to seller’s documents, including the deed to the
proposed insured owner(s).
• The fraudster will often provide a government issued photo ID that is fraudulent.
• A legitimate notary’s credentials and seal are often fraudulently applied without the notary’s
• The notary may be from out of state. If so, the notary is often from New Jersey.
• The closing package is often be returned from a different city or state than where the fraudster
purportedly was when the documents were executed. Again, New Jersey is often the site from
where the closing package is returned even when the fraudster was purportedly in an entirely
different location when documents were notarized.
• The fraudster requests that net sales proceeds be wired. Wire instructions may change such as a
change in banks, direction of the proceeds to an entity rather than the individual, or proceeds
directed to a party other than the seller. Excuses or rationalizations are provided to justify the
A title insurance claim arises when the true owner of the property discovers that their property was sold
and comes forward to challenge the insured title. A forged deed is void by operation of law. So, a claim
can potentially result in a full failure of title and a complete loss under the title insurance policy. Since
the fraudsters often operate and “hide” in cyber space, it is difficult to locate and prosecute these bad
“Red flags” and factors to heighten scrutiny include:
1. Sale/encumbrance of unimproved property.
2. For sale by owner or the listing realtor randomly receives the deal.
3. The property may have a substantial value, but the listing price is often below market value to
generate interest quickly.
4. Seller quickly accepts the buyer’s offer with a preference towards a cash sale.
5. The property is not encumbered.
6. The seller does not appear in person.
7. The seller communicates primarily, if not exclusively, by email and text.
8. Mail-away closings and seller requests to use their own notary.
9. The notary may be from a jurisdiction other than where the seller resides or where the property
10. Proceeds wired to a bank or person/entity out of state.
11. Proceeds wired to an entity’s bank account when seller is a natural person or vice versa.
12. Seller’s wiring instructions may change such as the recipient bank, the recipient, the account,
13. The seller’s proceeds wire is initially rejected by the recipient bank because the account was
Any transaction that involves any of the elements above should be carefully reviewed for any indication
of fraud, and there may be additional requirements imposed prior to insuring such transactions. As
always, please contact underwriting to discuss any questions or concerns you may have, and to obtain
any further requirements based upon the particulars of a specific planned transaction. We are here to
help and support you.
Information provided by Old Republic Insurance Group