A new scam targeting vacant properties is on the rise in California.

According to a warning issued by the California Department of Real Estate, scammers posing as property owners have been contacting real estate agents and requesting their assistance to sell vacant homes and land they don't own.

Known as "vacant land scam" or "vacant lot fraud," this fraudulent real estate scheme was initially reported on the East Coast and made its way to California at the start of this year.

In January, the Silicon Valley Association of Realtors issued a warning to local Realtors about the scam. Most recently, the California Department of Real Estate issued a similar warning statewide after law enforcement agencies and district attorney's offices around California reported a sharp increase in this type of fraud.

In this hoax, the criminal searches public records to identify owners of real estate that is free of mortgage or other liens. Most often, vacant lots and investment, vacation or rental properties that are not occupied by the owner are targeted. The scammer will then pose as the owner and contact a real estate agent to list the property for sale with the intent of pocketing the sales proceeds.

These scammers typically say they cannot personally meet with either the listing agent or buyer of the property because they either live in another state or abroad or are traveling.

The criminal takes advantage of e-notaries and online communications, attempts to defraud the actual owner, the buyer and every service provider involved by selling the property under market value with an exceptionally quick escrow, according to a press release from the California Association of Realtors that was issued in June after the trade association received several calls on its legal hotline from agents who were suspicious that the person who signed their listing was not the actual owner.

The scam usually goes undiscovered until the sale closes and the transfer documents are recorded with the county. This scheme has particularly affected the elderly and foreign real estate property owners as there are no means to automatically notify the legitimate owners, according to state officials, according to the Department of Real Estate.

In one case, the “seller” electronically signed the listing contract, disclosures and a purchase and sales agreement with a cash buyer. The property was scheduled to close once the “seller” sent notarized documents to the closing attorney. The scam was averted when a family member contacted the real owner of the property after noticing the property was listed for sale. In another case, a friend noticed a property listed for sale and alerted the owner.

"We continue to remind our (Realtors) to exercise due diligence in taking proper steps to verify the owner of a property before accepting a listing," Jim Hamilton, president of the Silicon Valley Association of Realtors, said. "Owners of vacant properties should check on their property on a regular basis. If they live out of state or overseas, it would be a good idea to keep in touch with a broker whom they trust and neighbors or relatives who live near the property."

Be aware of these 'red flags'

These criminals usually use a number of tactics designed to keep their crimes from being discovered until it's too late. The Department of Real Estate is urging homebuyers and real estate professionals to watch out for these tactics:

• Seller requests that the property be listed below market value to generate immediate interest.

• Seller requests that no "For Sale" sign be posted on the property.

• Seller requests preference for a cash buyer, quickly accepts an offer and demands a quick closing.

• Seller refuses to meet in person, preferring to be contacted through email, text or over phone and typically refuses video calls.

• Seller refuses to attend the signing and claims to be out of the state or country.

• Seller demands to use their own notary, who then provides falsified documents to the title company or closing attorney.

• Seller insists that proceeds are wired to them.

"These characteristics may not be red flags on their own, but when several or most occur, the risk becomes more apparent. Unfortunately, this scam is usually only discovered once the transfer of documents has been recorded with the appropriate county," Hamilton said.

How to avoid being scammed

For real estate agents, the Department of Real Estate offered these tips on how to prevent the scam:

• Request an in-person or virtual meeting and see proper government-issued identification.

• If they won't meet, require them to utilize the services of third-party identity verification service provider.

• Conduct an online search using the name of the property owner. Look for a phone number and recent photo. If you find a number, contact that person and verify they are the actual owner.

• Send via overnight mail a copy of the electronically signed listing to the address or record with a request to confirm the listing's accuracy. This will alert the legitimate owner of potential fraud.

• Require that the property owner provide a copy of a voided check with the seller's disbursement authorization form.

• Use a wire verification service or confirm wire instructions match account details on the seller's disbursement authorization form.

The Department of Real Estate also is encouraging brokers to develop written policies with respect to listing properties in which the licensed real estate professional and seller have never met in person.

Real estate agents who believe that a scam is occurring should withdraw the listing from all sites, inform their MLS provider and report it to the police department where the property is located or file a complaint with the Internet Crime Complaint Center.

Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.

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