Sun Sentinel reporter, Brett Clarkson, reported yesterday that a couple had been arrested for identifying foreclosed properties in Broward, Palm Beach, Miami-Dade and Martin counties, changing the locks on those properties and then passing themselves off as the property owners to unsuspecting tenants.
Apparently, the real estate hoax was fairly elaborate and included falsifying title documents. The fraudsters managed to lease out 27 foreclosed properties with a gain of approximately $240,000 in nine months in the form of rent, lease deposits, etc.
You might ask how these victims could not have known that the people posing as owners were not record title owners of these properties. Think back to whenever you rented a property and ask yourself how much due diligence you performed to ascertain the identity of the other party involved. Prior to the foreclosure crisis, the answer is probably not a whole lot. However, these days with a glut of foreclosed properties still out there, it is important to be sure you are dealing with the owner of a property. Unlike a sales transaction where title examination is involved, leasing transactions are particularly vulnerable to this kind of fraudulent activity. We have even seen some associations attempt to rent out properties without having taken title to the properties themselves. Absent title or a court order allowing an association to lease out such property, that transaction is not legally sanctioned.
So how should a potential renter proceed? Well, he or she can search the public records to see if the property for rent was, in fact, foreclosed and who owns title at the time of the proposed lease. If the names do not match up. there is a problem. The potential purchaser can also search the landlord's name on the Tax Assessor's Rolls or at the Property Appraiser's website to again see if it matches up with the property in question.
The real estate market the last few years has also created another area where potential renters should be wary. Renters of condominium or cooperative units or single family homes in a homeowners' association, should inquire as to whether or not the owners of those units are delinquent in the payment of assessments to the association. Many of those potential renters are still unaware that renting from a delinquent owner can create hassles for them.
The realities of the real estate market have not always created an environment that is friendly to people who fail to undertake some basic level of due diligence in the pursuit of a real estate transaction. It is always good to remember that slogan from the Cold War: "trust, but verify".