A few years ago, the Las Cruces Police Department reported that three local families had fallen victim to rental fraud. In one case, a family who was relocating to Las Cruces from California was scammed out of $1,000 while trying to rent a home listed on Craigslist. In another report, an NMSU student was conned out of $500.00 by someone pretending to be the owner of a property.
This is not breaking news. Both the Office of the Attorney General and LCPD have asked landlords and tenants to be especially diligent when transacting business to rent or lease a home. The warnings apply to both landlords and tenants because both are subject to being scammed. Here are a couple of examples of how the rip-offs are perpetrated.
In Taos, a landlord became suspicious when he received a check for $5,000 from a Craigslist rental applicant who was only required to tender a deposit of $1,500. The prospective renter later emailed the landlord to say that his “sponsor” had uncovered the overpayment “situation” and instructed the landlord to wire transfer the $3,500 difference to a furniture company that was handling the move for the tenant. As you might have guessed, the prospective tenant’s check was bogus. The landlord was lucky that he uncovered the scheme before sending the perpetrator $3,500 of his hard-earned wages.
A few years ago, the Las Cruces Police Department reported that three local families had fallen victim to rental fraud.
In another case, an Albuquerque man nearly fell victim to rental fraud when he responded to a Craigslist ad for a two-bedroom, two-bath home in the Northeast Heights area. The notice was purportedly placed by a property owner whose ad read: “JUST TRANSFERED TO WEST AFRICA, WE ARE LOOKING TO RENT THIS HOME TO A RELIABLE TRUSTWORTHY TENANT.” The prospective tenant was asked to send a $1,000 deposit to the property owner. After unsuccessful attempts to locate the property in question, the wise tenant decided to terminate negotiations with the fictitious landlord. This was the very scam used to steal the $1,000 from the California couple.
Situations such as these constitute many of the run-of-the-mill types of con jobs that have been perpetrated against landlords and tenants for decades. Over the past few years, however, cases in which property owners defraud their own renters have also been reported to authorities. In those instances, landlords fleece their tenants by contracting to rent or lease their homes to them while knowing that their property is in foreclosure, and that it will be just a matter of time until the tenant is evicted. The owner pockets the rents but doesn’t send the money to the lender.
How can landlords and tenants protect themselves from rental scam artists? The first step in rental fraud prevention is to look for the red flags.
Does the offer appear too good to be true? If so, it probably is. Is the landlord requiring cash-only payment or payment by wire transfer? Situations such as these are becoming more and more common and are one of the hallmark types of rental scams. Does the prospective tenant request a refund of an overpayment? This is one of the hottest scams currently around and should be avoided at all costs. Is it impossible to meet the owner or the owner’s representative because they are out of the country? If so, your money will soon flow to wherever the low life resides. Do you get an uneasy feeling about the people involved or the situation itself? If so, run!
The next preventative step is to obtain as much information about the property owner as possible. It would not be out of the ordinary to ask if the property is in foreclosure. Foreclosure filings are posted under the property owners’ names at www.nmcourts.com. Likewise, it would not be out of the question to ask the landlord for references to former tenants. Prospective tenants can also verify ownership through public records. In Doña Ana County, determining ownership of a property is as easy as logging on to http://assessor.donaanacounty.org/assessor/web/ and researching the property address. It is also advisable to speak with the neighbors about the history of the property.
In addition to being on the alert for red flags, landlords and tenants should be on the lookout for green flags as well.
Does the owner’s I.D. match the county’s ownership records? Good! Does the tenant’s I.D. and social security card match the information on the application? Good! If the owner is not present, is the owner’s representative a Realtor or property manager doing business out of a nearby brick and mortar location? Good! Does the Realtor or manager have a written agreement to represent the owner? Good! Is the Realtor licensed by the New Mexico Real Estate Commission? Good! Does the owner or manager have access to utility bills? Good! Will you be allowed to review the rental or lease agreement prior to turning over any money? Good! Do you feel positive about the situation? Good!
It's important to note that any person engaged in managing a rental property must be licensed through the New Mexico Real Estate Commission. An exception is made for a property owner renting his or her own property. Owners may also designate another unlicensed person to represent their property, provided it is done using a valid power of attorney. All other unlicensed activity is considered illegal and a felony according to New Mexico law.
Since rental scams are perpetrated almost exclusively using vacant or nonexistent properties, it is important to note just how easy it is for a thief to commandeer a home. According to a report from the Las Cruces Association of Realtors on July 12, a total of 89, or 32 percent, of the 278 homes, townhomes and condominiums listed for sale on that day were designated as vacant. All are terrific candidates for use in a rental scam.
Whether you’re a landlord or a tenant, making sure you perform your due diligence prior to entering into a real estate rental transaction can save you more than just embarrassment. For tenants, it can save rent and deposit money, moving expenses, utility costs and — most importantly — it can save you from identity theft. How so? You’ll be less apt to provide an application containing your social security number, address, driver’s license number, credit card numbers and other personal information to people who intend to use it for nefarious purposes.
Landlords stand to save lost rents, the prospect of finding an unsuspecting and unauthorized tenant living in the property, and property damage itself.
If you feel that you may have been a victim of rental fraud, contact the Las Cruces Police Department or the New Mexico Attorney General immediately. They’ll be happy to take a report and help you track down the culprits.
See you at closing.
Gary Sandler is a full-time Realtor and owner of Gary Sandler Inc., Realtors in Las Cruces. He loves to answer questions and can be reached at 575-642-2292 or Gary@GarySandler.com.
