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Rental scams can target either landlords or tenants

To protect yourself from fraud, do some legwork. Start by asking for identification to make sure the people you're dealing with are who they say they are.

March 25, 2012|By Lew Sichelman

Reporting from Washington —

Three days after listing a house for sale, real estate agents Richard and Jean Murphy of Portland, Maine, began receiving a surprising number of calls — not from buyers but from would-be tenants.

It turns out the callers were answering an ad that said the place was for rent, "and at a really low price," the agents for Harborview Properties recall. Worse, the "owner" was not the Murphys' client. It was someone living in another state who told callers that if they sent $1,500, the place would be theirs.

One woman did that just before she called the Murphys, but by then it was too late. Her money was gone forever.

False advertising is just one of many fraudulent schemes designed to fleece unsuspecting renters.

The FBI and other federal agencies keep tabs on the billions of dollars that lenders lose to fraud every year, but no one has a handle on how much owners and tenants lose.

"I've tried to find statistics," said Michael Schaffer of CheckYourLandlord.com, "but I've never been able to."

That's probably because few people report they've been had, probably because their losses are small.

"When you lose $1,000 to $2,000, you chalk it up to your own stupidity and move on," said Schaffer, whose website checks prospective landlords to make sure they are legitimate.

The rental gambits run the gamut, from "send your money to Nigeria and we'll send you the keys" to posing as property managers and stealing potential tenants' confidential personal and financial information. Some con artists even set up fake management companies, complete with websites, and run the scam on multiple victims before moving on.

One of the most popular ruses these days is run by cash-strapped owners who are nearing the end of the foreclosure process after failing to make their payments. They vacate the property and rent it to an unsuspecting tenant. But instead of paying their mortgage, they pocket the cash. When the sheriff shows up to evict the owner, it is the tenants who are sent packing if they can't produce a lease that the lender will honor.

In other cases, con men have been known to break into abandoned houses, advertise the place for rent and collect one or more months' rent and a security deposit. In return, the "tenant" receives a lease, but it's worthless.

In some instances, nonpaying tenants are the swindlers. About to be evicted, they pose as the owner of the property, collect the first month's rent and security deposit, possibly from multiple victims, and then move out, never to be heard from again.

You can protect yourself from becoming a victim of these and other ploys by making sure the people you're dealing with are who they say they are. Although the service provided by CheckYourLandlord.com is convenient and inexpensive, you can do much of the legwork yourself.

Start by asking for identification. Most people don't because they are afraid they might offend someone. But, Schaffer warned, "you can never be sure who you are dealing with if you don't see a driver's license."

Next, make sure that the person owns the property and that the place is not in foreclosure. In most jurisdictions, this kind of information is online. Start at the county's website and look for the recorder of deeds or the assessor's office. One or the other will tell you who the legitimate owner is and whether a lender has recorded a notice of default — or lis pendens — against the property.

Also look for other liens, perhaps filed by a homeowners association for unpaid dues, a government jurisdiction for unpaid property taxes or a plumber for an unpaid bill. Any one of these may be a sign that the owner is in financial trouble. So are bankruptcies, criminal actions or civil cases filed against the owner, especially by previous tenants.

Another potential red flag is a lien against another property owned by the same person. While this is not indicative of high risk in and of itself, Schaffer said, it could mean that the owner is in financial hot water.

If this kind of information isn't online, you'll have to look it up in person at the county courthouse or pay CheckYourLandlord. For no charge, the site will search databases to determine whether any default notices have been filed. And for $27.95, it will perform the other tasks mentioned above.

None of this is a guarantee that you won't be fleeced. After all, a legit landlord may run into problems after you move in.

Working with a property manager or real estate agent doesn't guarantee anything either. Schaffer said you should check out the company and its representative just as thoroughly as you would an owner representing himself.

Ask for a photo ID, such as a driver's license, and proof that the manager or agent has a right to sign a lease on behalf of the owners. And check out the property owner yourself, because the agent or company you are dealing with may not have done its own due diligence before listing the house for rent.

lsichelman@aol.com

Distributed by Universal Uclick for United Feature Syndicate.

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