Real Estate Fraud in Arizona

In my law practice, I see many of my clients have been scammed by nefarious individuals. Some of these scams include; Bitcoin or Cryptocurrency scams, credit card scams, love scams, and real estate scams. Scammers are constantly sending text messages, emails, phone calls, and other forms of communication hoping to catch someone who is unsuspecting or naïve.

People who have been defrauded out of their hard-earned money find themselves in a situation where they have lost their money, credit, savings, and sometimes their homes due to falling for these scammers. In many cases, filing for bankruptcy is their last option to save what assets they have remaining from the reach of creditors. In this article, we will take a closer look at real estate scams and how to protect yourself and your home.

What Is Real Estate Fraud?

Real estate fraud can take on many forms whether you are the homeowner or a real estate purchaser, seller, or even a renter. These scams typically involve the fraudulent transfer of title of a person’s home or property by forgery, falsification of documents, ownership records, and other means that might give the allusion that one person owns a property when they do not. The two most common forms of real estate scams include title and deed scams and mortgage loan fraud.

There are other scams involving a person or entity who claims ownership of a property, usually vacant, attempts to rent the property, collects rent or security deposits, and then moves on with the money. The renter attempts to move into the newly rented residence only to be forced out by the true owner.

Home Title Theft / Mortgage Title Theft

Home title theft, also known as mortgage title theft or property title fraud, is a type of real estate fraud in which a scammer gains control over the title of a homeowner’s property without the owner’s knowledge or consent. This type of fraud typically involves the following steps:

Obtaining Personal Information

The fraudster starts by obtaining personal information about the homeowner, such as their name, address, and possibly even their Social Security number.

Falsifying Documents

The scammer then forges documents to transfer the property’s title into their name or a fictitious entity. These documents may include a fraudulent deed or other paperwork related to property ownership.

Recording the Fraudulent Documents

The scammer files these forged documents with the local county or city recorder’s office, making it appear as though they are the legitimate owner of the property.

Taking Out Loans or Selling the Property

Once they have control of the property’s title, the scammer may attempt to take out mortgages or loans using the property as collateral, sell the property to an unsuspecting buyer, or even rent it out. They can profit from the property while the rightful owner remains unaware.

Hidden Ownership

Homeowners are often unaware of the theft until they receive notices of missed mortgage payments, foreclosure proceedings, or even eviction notices.

Home title theft can have devastating consequences for homeowners, including financial losses, damage to credit scores, and the potential loss of their homes. It can be a challenging and time-consuming process to rectify the situation and regain ownership of the property.

What Are Title and Deed Scams?

In Arizona, title and deed scams involve the scammer using trickery and forgery to gain access to a person’s home. The scammer will pose as a real estate agent or investor, gather personal identification information from the true homeowner, then use this information to create a forged title or deed, obtain additional mortgage(s) on the property in the true homeowner’s name while the scammer collects the funds, sell the property out from underneath the true homeowner, attempting to foreclose on the property, or scam the true homeowner into signing over the property deed or title to the scammer. 

A lot of times these scams are done to people in mortgage distress. The homeowner is facing a foreclosure proceeding or “trustee sale.” The scammer poses as a real estate “guru” who can help the homeowner out of their jam by transferring title to the scammer. 

The scammer promises to help the homeowner catch up on the payments or some other incentive to get the homeowner to transfer ownership of the property. Once the scammer obtains the title or the deed, the scammer can easily obtain fraudulent mortgage(s), sell the property to someone else, sell the property to a “straw man” who then transfers the property to someone else or another entity, or many other scams.

A straw man is a legal term meaning a third party whose sole purpose is to conceal information or who the real identity of someone else is and what their true intent is regarding the property. According to former Arizona Attorney General, Mark Brnovich, between January 2021 and August 2022, more than 65 reports of scams were reported to the authorities.

Frequently asked questions