Condo Fraud, Buy Title Insurance

By: Denise & Melissa Stewart

Dan and Barbara Morris came to Florida on vacation for years from the Northeast. In planning for their retirement, they decided to buy an Oceanfront Condo in Hollywood Beach. Their budget was $300,000, and they only wanted to be able to see the Ocean from the balcony. 

Dan thought that finding a condo would be as easy as typing TRULIA on his laptop.

After looking for several days, and not finding any "Steals", Dan decided to try looking on Craigslist, and to his surprise there were several ads. One in particular caught his attention: "Seller in a pinch, will discount Condo by 25% off appraised value for quick closing. Seller to pay all closing costs". Dan called the Seller, went to look at the condo, and the next day, he signed a Contract. Dan also paid the Seller a deposit of $5,000, made payable to the Seller, individually.  The Seller had provided what appeared to be a valid appraisal, with comps that Dan had no reason to doubt.  The appraisal had the value stated at $400,000, and the  Contract price was $300,000. The Seller explained that his Title Company would be handling the closing, and that it should only take 7-10 days. Dan was so happy and he and his wife started to buy furniture for the Condo.

This was the first time that Dan and Barbara Morris had ever bought any property in Florida, and they had no experience dealing with condo associations, Realtors and Attorneys. They were assured that all of the closing documents would be prepared by an attorney and the documents would be "Notorized". 

The closing, as explained by the Seller, would occur in the Condo so that they could also do the walk through at the same time. Dan was emailed the Closing Statement and wiring instructions 2 days in advance, and because he was never late on a payment in his life, Dan wired the balance of $295,000 to the bank account on the wiring instructions. Dan had his brother-in-law (Dave) look at the closing statement, and everything looked fine to Dave.

On the day of closing, everything went just as planned, and Dan was given 2 sets of keys, and assured that the Deed would be recorded the next day. Dan and Barbara shook the Seller's hand and thanked him for being so kind. The furniture was delivered later in the afternoon, and Barbara and Dan celebrated their new "Home-away-from-home".

Everything was fine until about 3 months later, a certified letter was delivered to Dan and Barbara, and the top of the letter read "Notice to Vacate". The rest of the letter was filled with legal terms that Dan did not understand, but he was sure it was a mistake, and decided that he would wait a week, and then call the Attorney that sent the letter. Before Dan could speak to the Attorney, Dan was met at his home by a man advising that he was being served with an Eviction Action, and that he should contact an Attorney immediately. As you can imagine, Dan was confused, aggravated, and feeling like this problem should be taken care of by his Seller, if there was a problem at all. He immediately tried to call the Seller, and the phone number was out of service. Dan immediately knew that something was very wrong. Dan contacted an Attorney.

Over the next 3 weeks, this is what Dan's Attorney explained to him:

- The "Seller" that Dan was dealing with was not the real owner of the property. The real owner had a similar name, and only visited the property 2 weeks a year.

- The "Seller" that Dan was dealing with was actually an ex-property manager that had made an extra set of keys to the unit, and was very familiar with when the real owner would come back to stay in his unit. The "Seller" was also very familiar with the inner workings of the Condo Association, and was able to forge a Condo Approval as part of the "Closing".

- The "Seller" that Dan was dealing with actually recorded a deed to the Condo. Part of the lawsuit was an action to void the Deed.

- The "Seller" that Dan was dealing with actually received the entire $300,000 from Dan, and immediately transferred the money to an account out of the Country, and closed the account.

Over the next 3 months, Dan and Barbara spent over $22,000 in attorneys fees, none of which would be reimbursed. Dan and Barbara were also advised that their entir investment was lost, and the only thing they could do would be to sue the fake "Seller" if they could find him. 

In one of the conversations that Dan was having with his Attorney, Dan asked: "What can someone do to protect themself, so that this cannot happen". The Attorney answered by saying" If you had purchased Title Insurance, you would not have lost a penny".

This was a very expensive lesson to be learned, and everyone should always deal with reputable Realtors, Attorneys and Lenders whenever buying real estate. The Attorney was correct, because the purpose of title insurance is to protect buiyers against things like fraud.

If you ever have any questions about buying condos or real estate in South Florida, please contact Denise Stewart at 954 881 9148, or email  denise@condo.net