Dirty Deeds are not Dirt Cheap
May 6, 2023
Mark Hutchins & Jereme Kleven
My Home Group
8360 E. Raintree Drive, Suite 120
Scottsdale, AZ 85260
Fraud is a mean word. It just sounds awful. Legally, fraud in Arizona has nine elements: (1) a representation, (2) its falsity, (3) its materiality, (4) the speaker’s knowledge of its falsity or ignorance of its truth, (5) the speaker’s intent that it should be acted upon by the hearer and in the manner reasonably contemplated, (6) the hearer’s ignorance of its falsity, (7) the hearer’s reliance on its truth, (8) the hearer’s right to rely thereon, and (9) the hearer’s consequent and proximate injury. That is a lot! Bottomline; someone is doing something very bad.
Recently, we have seen fraud displayed in the worst way in our industry. It has included attempts at stealing a home or land, and also encompasses deceptive “fix and flips.”
We live in an online world via the iBuyer and iSeller space, unfortunately this can lead to challenging elements full of disruption and corruption. Through various online portals, individuals are improperly posing as owners of land/homes and fraudulently trying to sell a property they do not own. The lawbreaker will pose as the actual owner of a property, participating in an on-line platform and then seeks to sell the property. They utilize fraudulent identification (driver’s license) and have the entire “scam” mapped out. These criminals are often presented to real estate licensees as “leads” through those same platforms. We are an involuntary part of the fraud.
So, what do we do as licensed agents? Well, we certainly need to be attentive to the red flags. While a licensee’s “job” does not require verifying a person’s identity, we do have an obligation to be observant and mindful. Questions to think about are: What does the “owner” actually know about the property? Can they truly assist with the listing? Are they cooperative with the Seller’s Property Disclosure Statement? Do they seem like the actual owners? Perhaps this is overkill, however fraud is happening way too often. Agents must be diligent and cognizant of the warning signs.
Another area of fraud is identified in “fix and flips.” Specifically, who is and who is not working on the “flip.” It can be more affordable for a flipper to use unlicensed subcontractors to save a few dollars. While the law and the standard forms require disclosures of the contractors that work on a home (licensed or not), it does not always mean that the flipper is complying with the law. Regrettably, the failure to use licensed contractors eliminates access to the Arizona Registrar of Contractors and its resources, including the Recovery Fund.
Fraud is a mean word and always is awful. It is beyond shameful when an individual engages in any form of intentional deceit. Sadly, this does happen. We as representatives of the Real Estate industry, need to be steadfast in recognizing “red flags” and as professionals, we have a duty to protect the public where we can.