I’ll be the first to admit that I’m not smart enough to commit fraud, but I am just barely smart enough to recognize it when I see it. Honestly, if people spent as much brain power and time engaging in a legal occupation as they did attempting to defraud the public, they would likely be just as rich and wouldn’t have to spend any time in prison. Go figure.

Last week, I had the unique and unsolicited “opportunity” to take a deep dive into the workings of an elaborate case of real estate fraud. It began when a client contacted me and asked me to find out a little more information about a listed home they were interested in purchasing. This particular home would be considered a luxury home due to the location, size and price range. Since I have worked with these clients in the past through several real estate transactions, I knew they had access to cash to make a purchase in this higher price range.

In preparation for their offer, I contacted my preferred title company and asked them to send me everything they could find concerning the title of the home. I knew there was an easement violation that the city had filed on the home (how I learned that valuable tidbit is a story for another time), but I wanted to see if there was a loan on the home or any other liens that would need to be cleared before closing. It was a simple request that ended in a very complicated finding.

Within a day, I had a slew of complex and messy legal documents in front of me, all attached to the home in the form of liens and encumbrances, meaning the home could not be sold with a clear title until all of these were settled. I needed a legalese interpreter. While I could understand the word “fraud” repeatedly referred to in one of the documents, as well as the irrationally large amounts of money, I could not see how the fraud was committed. After calling a few different title companies and receiving the same answer from all (the property is unsellable as it stands), I contacted the legal counsel of one title company and asked for some help with interpretation.

From the legal counsel for title, I was told: “The judge basically agreed that the owner took money from his company to buy this property in an effort to hide the money from creditors, which basically means this property will be used to pay that money back — and likely considered a complete failure of title.  This issue is significant, and I don’t see a way around this one short of getting the pre-judgment writ of attachment released prior to the issuance of any kind of insurance.  The other issues are significant as well, but this $1.55MM is the most significant.”

After contacting the attorney representing the plaintiff in the case, I learned more than I would ever want to know about how this type of fraud took place. Since I’m not in the business of teaching people how to perpetrate fraud, I’ll likely not be repeating any of this back. Frankly, I don’t know how anyone has this kind of time to think up such preposterous absurdity. However, I guess if committing these types of frauds is the full-time occupation, then there would be plenty of time.

Nearly as sad as the crime itself was the fact that the list agent had no idea what these liens were that I was referring to when I told him it was our biggest withhold in presenting an offer.

“These liens will be cleared upon closing, just like any other liens,” he responded, when asked about the plan.

“Well, three title companies as well as the attorney for the plaintiff in the case of the largest lien all beg to differ,” I responded.

To which he said, “Well, if you can figure out a way, we would love to do a deal with you.” Which puts the ball clearly back into my court, which is fine by me. I’m always up for the challenge. Let’s play ball.

Jen Fischer is an associate broker and Realtor. She can be reached at 801-645-2134 or jen@jen-fischer.com.