Raising Elder Awareness of Fraud in Real Estate Rentals
By Don Drake, Connelly Law Offices, Ltd.
"As people age, their legal needs change, and that's where elder law comes in. It's a specialized area of law that focuses on addressing the unique needs of older adults," said RJ Connelly III, a professional fiduciary and certified elder law attorney. "Elder law encompasses a wide range of legal issues, including estate planning, healthcare, retirement, and housing. One of the most pressing concerns for seniors is downsizing from a larger home to a smaller apartment or condo. While this move can be an exciting time for them to plan new adventures and simplify their lives, it also comes with its own set of challenges. Seniors may face difficulties in navigating the complex process of selling their home and transferring to a new residence, especially in today's economy."
"As seniors are increasingly turning to rentals instead of buying a smaller home due to the escalating interest rates, they are finding a shortage of rental properties," stated Attorney Connelly. "As the costs of new rental developments continue to rise, landlords and developers find it less financially viable to invest in these properties, which, in turn, limits the supply. This scarcity of rental properties has resulted in a surge in rental prices, creating more competition for available units. Unfortunately, this has also opened the door for real estate scammers to target older consumers who are vulnerable to such scams."
Jim and Rosalie's Story
Jim and Rosalie's dream of downsizing turned into a nightmare when they were defrauded in a real estate swindle. After their youngest child got married and moved out of their spacious home, they decided to sell it and move into a one-bedroom, two-bath townhouse. Responding to an online ad, they were contacted by someone who claimed to be the homeowner and invited them to view the property.
The townhouse was stunning, with a balcony that opened out to a serene, wooded area and a spacious garage. It was priced right and seemed perfect for their needs as a retired couple. They were even given the access code to the house and planned their move.
However, on the day they were supposed to move in, everything fell apart. When the movers started unloading their belongings, the police showed up and informed them that they were trespassing. It turned out that the person they had been dealing with did not own the property and had no rights to lease it out. The property belonged to a local real estate agency.
To make matters worse, they had turned off their cable and gas services at their previous home and had switched their accounts to the townhouse property. They were left stranded with no place to go. Luckily, they had something to fall back on, but not everyone is so fortunate.
The cost of the rental was $5400, and they had to put the sale of their home on hold. They filed a police report, but the chances of catching the swindlers were slim. They caution others not to trust online services or listings when renting a property. It is best to use a licensed real estate agent to avoid the kind of trouble, money, and aggravation they had to endure.
How a Rental Scam Occurs
Scammers have been known to advertise empty properties online, and these swindles have become increasingly common in recent years. According to Attorney Connelly, the scammer typically initiates contact with the potential victim after the latter shows interest in the property. The scammer then engages the victim in a discussion about the rental price, which is often too good to be true. The victim is further pressured into making a quick decision, as the scammer claims that many others are waiting for the property.
Once the victim agrees to rent the property, the fraudulent plan goes into action. Such scams can take the form of straightforward cash transactions or elaborate schemes that involve multiple parties and can be difficult to unravel.
It is important to be cautious when dealing with online rental ads and to take steps to verify the legitimacy of the property and the landlord before agreeing to any financial transactions. Below, the FBI explains a couple of scams:
A common scam involves the scammer insisting on a cash payment for an application, the first and last month's rent, and a security deposit. They may claim that it is a cash deal because they have been "burned by bad checks," which has caused their property to be vacant and income lost.
Unfortunately, this type of scam can be very convincing. The potential renter may be willing to produce the cash out of fear of losing the chance to rent the apartment. After the money changes hands, no further contact occurs, and the money is lost. It is important to be cautious when dealing with rental transactions and to always double-check the legitimacy of the landlord or property owner before providing any payment.
Scammers duplicate legitimate postings from real estate websites and then modify them before reposting them. To make the fraud look more convincing, the scammers often use the brokers' actual names to create a fake email address. When an interested individual sends an email through the classified advertisement website, the response they receive comes from someone who claims to be the owner.
The "owner" then claims that they can't show the property because they are either out of town or out of the country, but they are more than happy to rent it out. To secure the property, the victim is asked to send money, and soon after payment is made, the property is no longer available.
It's essential to be cautious when dealing with online classified ads for real estate. Always verify the legitimacy of the advertisement and the owner before sending any money or making any decisions.
Local Scams Abound
"The Internet Crime Complaint Center of the Federal Bureau of Investigation has recently reported a worrying trend of an increase in real estate scams over the past three years. According to Attorney Connelly, the numbers are quite alarming, with 11,578 people nationwide reporting losses of over $350 million in 2021 alone. This represents a 64% increase from the previous year. The FBI's Boston Division, which covers Maine, Massachusetts, New Hampshire, and Rhode Island, has also reported a significant increase in the number of victims. In 2021, 415 individuals fell prey to scammers who made off with a total of $13 million, an increase of 27% from the previous year. The numbers broke down this way:
Forty-two victims in Maine lost $489,309.
Two hundred ninety victims in Massachusetts lost $8,944,041.
Forty-one victims in New Hampshire lost $2,576,210.
Forty-two victims in Rhode Island lost $1,414,709.
Here are some examples from Rhode Island as reported by the Boston FBI office:
A man from Idaho who was relocating to Rhode Island responded to a Craigslist advertisement for a year-long rental property located in Narragansett. After receiving a $21,756 advance from his employer, he wired the money to the supposed "owner" and made plans to meet and gain access to the property. However, before the scheduled meeting, the man received a text message canceling the appointment, claiming that the "owner" was in Chicago taking care of his sick son. Later, when the man arrived at the supposed rental property, he discovered that the property owner had not posted an online ad and the property was not available for rent.
A man from East Providence responded to an online advertisement for an apartment in Cambridge, Massachusetts. The ad required him to pay the first and last month's rent along with a security deposit of $6,000. However, after the man paid the amount and waited for the check to clear, he was not given the keys to the apartment. When he tried to contact the owner, he received no response. Eventually, he received a text message telling him that he had been scammed and not to contact the number anymore. This incident highlights the risk of online scams and the importance of being cautious when making online transactions.
It has been reported that a student from the University of Rhode Island fell victim to a scam after responding to an advertisement on Facebook Marketplace for an apartment in Wakefield. The student, who wired $1,800 to secure the unit, was informed by the supposed landlord that he wouldn't be able to view the apartment before moving in due to constant traveling. Upon arriving to move in, the student was given the address of a leasing office and was informed that no units were available. It serves as a reminder to always exercise caution when dealing with online transactions and to never wire money in advance without verifying the legitimacy of the transaction.
Avoid Being a Victim
Here are six tips to avoid being a victim of real estate fraud:
When you are asked to wire funds, exercise caution and due diligence to ensure that your money is safe. Firstly, you should verify the recipient of the funds by checking their name, address, and bank account details. Additionally, check the phone number and website of the agent or organization requesting the funds to ensure they are legitimate and not a scammer. Finally, requesting references from the recipient can also provide an additional layer of security and reassurance. By taking these steps, you can help protect yourself from fraudulent activities and avoid becoming a victim of financial fraud.
It is always advisable to never make any monetary commitment towards a property that you haven't physically seen or been given the opportunity to inspect thoroughly.
Verify the identity of the landlord or property owner before moving into a new place. One way to do this is by conducting research on public records to find out who exactly owns the property you're interested in. This information can help ensure a safe and secure living environment for you and your family.
Conduct thorough research on local rental and property prices before making any decisions. If you come across any numbers that appear to be significantly lower than comparable properties in the area, exercise caution and do further investigation to ensure that the deal is legitimate. This way, you can make an informed decision and avoid any potential risks.
When considering dealing with a business owner, research and check out their online reviews, references, and other relevant information from previous clients. This can help you gain a better understanding of their reputation and level of customer satisfaction, which can inform your decision-making process and ensure that you make an informed choice.
Exercise caution if the landlord or owner claims to be out of the country and requests money to be wired to an offshore bank account.
"If you suspect that you have been targeted or victimized by a rental scam, it is crucial to take immediate action to protect yourself," said Attorney Connelly. "You should cease all communication with the suspected scammers right away. If you have already transferred money to them, it is important to notify your financial institution and report the funds transfer to the FBI's Internet Crime Complaint Center without delay. It's essential to act quickly to minimize any damage and increase your chances of recovering any losses."
The information provided in this blog is for general informational purposes only and should not be taken as legal, financial, or medical advice. The content, materials, and information presented in this blog may not be the most up-to-date information available regarding legal, financial, or medical matters. The purpose of this blog is to provide readers with an overview of the subject matter and a starting point for research. It is recommended that readers seek professional advice from an attorney, professional fiduciary advisor, or medical provider for specific legal, financial, or medical questions. Additionally, this blog may contain links to third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites, and readers should exercise their own judgment when accessing these sites.