As millions of Americans struggle with declining home values and rising
foreclosure rates, many are rediscovering the benefits of renting.
By trading in their mortgages for monthly payments to their
landlords, renters sidestep a host of hassles including property taxes,
homeowner's insurance and major maintenance costs. But with these
benefits comes the potential for an entirely different and potentially
devastating problem: rental fraud.
The most common types of rental fraud these days come in two flavors
-- one as old as the landlord-tenant relationship itself, the other
fairly new – at least in terms of its present frequency. The first type
is the out-and-out con job, in which one or more brazen con artists
prey on a victim's trust. The crooks advertise a house or apartment,
demand first- and last-month's rent, a security deposit or both up
front, and then vanish. An example of this recently occurred in
Pasadena, Calif., where police say a man bilked 22 would-be renters of
about $2,200 each.
The other type is intimately related to the ongoing mortgage
meltdown, and involves property owners renting units to tenants while
knowing full well that the property is in foreclosure. In most cases,
the hapless renter's first clue that something is amiss is when an
eviction notice shows up at the door. While news reports of these
incidents are largely anecdotal – crime statistics have yet to reflect
a spike in foreclosure-related rental fraud – the sheer volume of the
anecdotes is alarming.
Beverly Earl, director of community and emergency services for
Catholic Charities of Riverside and San Bernardino counties in
California, says that before the collapse of the housing market, her
agency had never heard of such fraud.
Now, she says, "We're seeing it every week."
By "seeing" them, Earl means that the victims are so financially
hurt by the crime that they show up at her agency seeking emergency
assistance, such as shelter, food and clothing.
Chuck Schilken, a 39-year sports writer, was a victim of the
old-school form of rental fraud: He and his cousin were conned out of
$1,200 while looking for an apartment to rent in southern Maryland.
Schilken had left messages with several people advertising places for
rent when a man called claiming to have just the right property
available at just the right price.
"Looking back, it just seems kind of silly," says Schilken, who
today lives in Los Angeles. "We were thinking we could only afford a
tiny apartment, and this guy had this huge house for $600 a month. That
should have been a red flag. Instead, I was telling my cousin about how
we could put a pingpong table in the basement."
There were other warning signs. The man called Schilken a few days
after showing him the place and said he could have it – provided
Schilken paid him a $1,200 deposit in cash up front. The man insisted
the transaction take place over the weekend at a diner in Washington,
D.C.
Schilken, lulled into confidence by the man's demeanor and by the
promise of such a bargain, missed all the flags. As weeks passed and
the man grew increasingly evasive about the move-in date, Schilken and
his cousin showed up at the Maryland house to post a note on the door
demanding the return of their deposit. On the door, they found notes
from several other would-be tenants, requesting the same thing.
Schilken reported the incident to authorities. The man was
eventually caught, and Schilken and his cousin recovered their money in
the form of a restitution check.
So what can a prospective renter do to keep from being scammed?
According to Garreth Lacy, a spokesman for the California attorney
general's office, asking the right questions up front can help avoid
headaches.
"The best advice is that prospective renters should ask the landlord
point-blank if the property is facing foreclosure," Lacy says. "It
seems logical, but that's the best line of defense – ask directly.
Renters can also ask for references from prior tenants who left in good
standing."
Lacy detailed other protective measures prospective renters should take before surrendering their hard-earned cash. Among them:
• Check for a notice of default on the address at the county recorder's office.
• Verify the owner of the property by going to the county assessor's
office. Make sure you're dealing with someone who owns the property.
• If the landlord says he or she is the owner's appointed
representative, ask to see proof. Con artists tend to balk at such due
diligence.
• Talk to neighbors about how long the property has stood vacant.
Lastly, if you feel you've been defrauded in a rental scam, don't hide your head in shame.
"It's not easy to avoid these types of scams," Lacy says. "File a
complaint with your state's attorney general's office if you suspect
fraudulent activity."
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