In a previous posting, I reviewed certain changes to the Residential Contract for Sale and Purchase recently adopted by the Florida Association of Realtors and the Florida Bar Association. As discussed, one notable change to the new form was the manner by which Deposits will be handled by the Escrow Agent. Instead of Deposits being subject to “ CLEARANCE” they will now be subject to “COLLECTION” which means that the funds must be actually and totally collected. The intent here is to insure that funds provided to the Closing Agent are GOOD!! This new terminology attempts to circumvent efforts to defraud the Closing Agent which efforts are enhanced during difficult economic periods.
One such prevalent scam occurring throughout the country goes something like this. The real estate agent is contacted, via the internet, by a potential client under the guise that they are currently living out of the United States but will be moving to the community to practice medicine at the local hospital. The fraudster then views a number of houses, again via the internet, and subsequently enters into a cash purchase agreement. The fraudster will then send a Cashiers or Certified Check to the Closing Agent via normal mail delivery in amount in excess of the purchase price. Several days pass and the Closing Agent will be contacted to determine if the funds have been place in the Closing Agents escrow account. After such occurs but short of the time necessary to verify that the funds are good, the fraudster will request the Closing Agent to issue check to a third party vendor for purpose of purchasing furniture. Unfortunately and as you may have guessed by now, the third party vendor is related to the fraudster and off go your good funds.
TIPS TO PREVENT YOU FROM BECOMING A VICTIM OF FRAUD
- If you are contacted indirectly (internet, etc) by a purported professional willing to buy property unseen for full value – be CAUTIOUS!! Deals normally do not present themselves in this manner.
- If it sounds too good to be true—it probably is!
- If the prospective purchaser requests the return of any funds before or at the closing – Proceed with Caution.