Seller Impersonation Fraud (SIF) has rapidly become one of the most critical threats facing the real estate and title industries. Sophisticated criminals—often targeting vacant lots, mortgage-free homes, or properties owned by the elderly or foreign investors—impersonate the true property owner using forged IDs and fraudulent paperwork to quickly sell the asset for cash. The unsuspecting buyer receives a deed that is void, and the criminal vanishes with the wired funds.

Recognizing the severity of this threat, the American Land Title Association (ALTA) has issued critical alerts and updated its Best Practices framework, placing immense responsibility on closing attorneys and title agents to serve as the final, essential gatekeepers against these fraudulent transactions.

I. ALTA’s New Red Flags: Spotting the Fraudster

Fraudsters rely on speed, minimal human interaction, and targeting specific vulnerabilities. ALTA’s guidance emphasizes vigilance for a combination of these red flags:

• The Property is a Prime Target: The property is vacant, non-owner occupied (a rental or investment property), or has no outstanding mortgage or liens (making the transaction easier).

• Urgency and Concessions: The seller insists on a quick, all-cash closing and lists the property below market value, often refusing to negotiate fees to maintain speed.

• Avoidance of Contact: Communication is strictly via email or text, and the seller provides constant excuses for refusing an in-person meeting or video call. They may use generic email addresses or unusual language patterns.

• Notary Interference: The seller insists on using their own notary (often a co-conspirator or a forged stamp) rather than a notary vetted by the title company or closing attorney.

• Inconsistent Data: The seller provides an address that differs from the tax mailing address on public records, or they are unable to answer specific, non-public questions about the property (e.g., “What material is the shed made of?”).

II. Mandatory Due Diligence: Enhanced Verification Protocols

The industry standard is no longer passive; it demands proactive, layered identity verification. Closing attorneys must move beyond simply checking a government-issued ID.

• Layered ID Verification: Attorneys should implement protocols that go beyond visual ID inspection. This includes using third-party identity verification tools (using non-public data) and potentially requiring selfie/liveness detection or a video call to match the individual to their ID.

• Independent Contact Verification: Never rely on the contact information provided by the supposed seller. The closing attorney must use independently discovered and validated phone numbers and mailing addresses from public tax records to contact the owner directly and verify the sale.

• Signature Comparison: The attorney must compare the seller’s signature on the new closing documents with the signature already on file in public records (e.g., the original deed when the owner purchased the property).

• Controlled Notarization: If a seller cannot attend closing in person, the closing attorney or title company must manage the notarization process. This means using vetted, approved notaries, or using Remote Online Notarization (RON) platforms that offer robust, legally sanctioned identity verification methods and video recording.

III. The Closing Attorney: The Final Gatekeeper

The closing attorney or title agent is the most critical checkpoint in the fight against SIF. They hold the fiduciary duty to the buyer and the obligation to the title underwriter to ensure the person signing the deed is, in fact, the true owner.

The attorney’s primary roles in SIF prevention are:

• Wire Control: The attorney controls the final disbursement of funds. Before wiring any proceeds, they must use a multi-step verification process (e.g., confirming the seller’s wire instructions via a phone call to an independently verified number, or using secure wire verification software) to ensure the funds do not go to the fraudster’s account.

• Title Insurability: The attorney acts as the agent for the title insurance underwriter. If a transaction shows multiple SIF red flags and the seller’s identity cannot be verified using enhanced protocols, the attorney may be obligated to refuse to issue the title policy or halt the transaction entirely until the legitimacy is confirmed.

• Client Education: The attorney must educate all parties—especially the buyer—on why the process is being slowed down and why the heightened scrutiny is necessary, protecting both the client and the integrity of the land records.

Conclusion

Seller Impersonation Fraud poses an existential threat to real estate buyers, as a fraudulent deed renders the title unmarketable and the buyer loses their money. The closing attorney’s meticulous adherence to ALTA’s enhanced due diligence, particularly regarding mandatory identity verification and controlled notarization, is the final, non-negotiable step in safeguarding a transaction. Relying on old methods is no longer adequate against modern, sophisticated fraudsters. To ensure your real estate transaction is protected by the highest standards of fraud prevention, with every red flag investigated and every identity verified, contact Lforlaw today to connect with expert closing attorneys specializing in title clearance and advanced fraud protection protocols.

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Sources

1. American Land Title Association (ALTA): Seller Impersonation Fraud Tip Sheet and ALTA Best Practices Framework Version 4.2 (Official guidance on red flags, ID verification, and notary protocols).

2. Federal Bureau of Investigation (FBI) Internet Crime Complaint Center (IC3): Annual Report (Statistics on real estate sector losses from cyber-enabled crimes).

3. Old Republic Title: Seller Impersonation Fraud (Industry analysis of common SIF targets and methods).

4. National Association of Realtors (NAR): Guide and Best Practices for Preventing Seller Impersonation Fraud (Collaboration guidelines for agents and closing professionals).