Several years ago, Haley and Michael Walcott of Bucksport bought a nearly 3-acre plot of land in Bar Harbor to one day build a home on.
So they never expected to see a “for sale” sign on the land when driving by it this spring.
The family’s property nearly fell victim to a fraud scheme in which a scammer impersonated Michael Walcott, and real estate agents unknowingly put it on the market without the rightful owner’s knowledge.
“We got married on that land and it holds a lot of sentimental value,” Haley Walcott said. “It would have been gutting for us if this had gone any further.”
While the scam was caught before money changed hands, it’s a prime example of deed fraud attempts that have become a growing risk to both Maine real estate agents and unassuming prospective buyers. Lawmakers have taken notice and formed a commission to understand the issue further, but passed on enacting recommended rule changes to combat the issue despite real estate agents now receiving fines for falling for the schemes.
The Walcotts learned of the scam after receiving a call from another real estate agent, Laurie Smallidge of Better Homes and Gardens Real Estate The Masiello Group, telling them someone appeared to be targeting their land.
Smallidge knew this because the scammer had also contacted her and asked her to sell it, she said.
Smallidge noticed the scammer’s behavior matched patterns often found in other fraud attempts. For example, they wanted to sell land quickly, preferred to communicate digitally, and contacted her through a third-party listing service, such as Zillow or Redfin.
“One of the red flags for me was that he knew the tax ID number that the town uses,” Smallidge said. “No one ever knows that.”
These scam attempts also usually involve vacant land, as it’s more difficult to verify ownership because “people own land but aren’t doing anything with it and aren’t paying attention to it,” Smallidge said. In some cases, scammers will go so far as to make a fake ID and give title companies a number to wire money to.
“I just had a gut feeling and it didn’t sit right with me,” Smallidge said. “You have to trust your instincts and verify the facts.”
She looked up the property owner’s address in public records and used a verification tool available to real estate professionals to find Michael Walcott’s genuine phone number, then called him.
Shortly after that, the Walcotts checked on the land and found a “for sale” sign on it, signaling that another agent had fallen for the ruse.
In the case of the Walcotts’ land, the scammer sent a message to Eileen McMorrow-Hallock of The Knowles Company in Northeast Harbor on May 8 and the pair communicated primarily via email before she and another associate broker, William Burnett, listed the property later that month, according to consent agreement documents from the Maine Real Estate Commission, which investigated the incident.
In one email to the fraudster, McMorrow-Hallock confirmed she “located your land information on the town tax records,” according to the commission. Bar Harbor Property Tax records for the land include Michael Walcott’s genuine Bucksport mailing address.
Haley Walcott called McMorrow-Hallock on May 27 to inform her that the property is not for sale and demanded the listing be removed immediately.
Michael Walcott filed a complaint with the Maine Real Estate Commission the same day, which resulted in McMorrow-Hallock and Burnett each receiving $4,000 fines for “failing to take steps to confirm the identity of the person who purported to be the owner,” among other things, according to the consent agreements.
McMorrow-Hallock did not return requests for comment about the Walcotts’ case. Claire Dorwart, owner of The Knowles Company, said the agency “responded promptly, diligently, and the matter was resolved before any transaction occurred or anyone suffered a financial loss.”
“We know others have faced more serious outcomes, and we hope greater awareness and shared guidance within our industry will help protect everyone involved in a sale,” Dorwart said.
Burnett said on Friday that he has learned from the experience and the team is “moving forward with a continuous improvement of standard practices” while ensuring colleagues and clients are aware of the growing risk.
Maine law doesn’t require real estate agents to follow a specific process to verify someone owns the property they’re attempting to sell, according to the Maine Real Estate Commission.
However, the Maine Association of Realtors provides methods agents can use to vet sellers, such as requiring them to provide a government-issued photo identification and engage in a face-to-face interaction before listing a property.
Realtors are also encouraged to verify the identity of a property owner by checking the county registry of deeds and municipal tax records. While that’s often how scammers find information to conceal their identities, the association advises agents to go a step further and send a letter to the address listed on a property’s tax bill.
Lastly, real estate agents have access to a security app that allows them to check if the phone number or email address someone is using to contact them is connected to the property they’re looking to sell, Smallidge said.
Title companies are also becoming more familiar with these types of scams and taking additional steps to ensure a seller genuinely owns a property before sending money to them, Smallidge said.
So far this year, the Maine Real Estate Commission has received two complaints in which a licensed agent listed properties by fraudulent sellers, according to Kristina Lunner, deputy commissioner of the Department of Professional and Financial Regulation.
In each case, the hoax was discovered before the property titles changed hands, but three people were disciplined because of those complaints.
These scam attempts arose after the commission received no complaints of such activity last year, Lunner said.
The Legislature formed a Commission to Recommend Methods for Preventing Deed Fraud, which delivered a report late last year that explained deed fraud, especially cases of people attempting to sell properties they don’t own, is “a growing problem nationwide” and has started to appear in Maine.
However, there isn’t much data on how frequently it’s happening in Maine, the methods scammers are using and how each attempt is discovered. That’s because there’s no uniform method for collecting such information, the report found.
“Due to the difficulties of locating and holding responsible the perpetrators of seller impersonation fraud, and the difficulties of unwinding real estate transactions after the fraudulent activity has occurred, it is essential to focus on preventing seller impersonation fraud,” the report said.
The report included a series of recommendations to combat the issue, such as encouraging the Legislature to require real estate professionals to “verify the identity of persons selling property in all real estate transactions” using specific steps.
Another recommendation would require municipalities to ensure the property tax records they keep contain up to date contact information for the owners, as that is a helpful tool for agents to confirm the owner of a property before listing it, the report outlines.
A bill to enact those recommendations was introduced in February, but killed the following month.
The report explained that seller impersonation cases often contain some red flags agents should be vigilant for. Faux sellers also usually contact multiple agents at a time to improve the chances of one taking the bait, Smallidge said.
“As Realtors, we have a responsibility to protect people, not just sell property,” Smallidge said. “We’re trusted and need to do our due diligence from the beginning to make sure this doesn’t happen.”