– New Bills Fight Estate Scam

Two Oakland County officials recently uncovered an abuse of several Michigan estate laws and pushed for change to close loopholes. The efforts of the Oakland County Treasurer and County Clerk have led to two bipartisan bills that will classify the abuse as criminal activity.

Currently in Michigan, a person called a public administrator can open a probate estate for a deceased person if the family or interested parties don’t within 42 days following the death. Public administrators sometimes serve in cases where there aren’t any heirs or where an impartial estate representative is needed.  Their job, like any personal representative of an estate, is to gather assets, pay any final expenses or creditors of the deceased, and distribute the remaining assets to surviving heirs. If no surviving heirs can be located any remaining assets must be turned over to the unclaimed property division in the State of Michigan.

Here, it appears that a real estate investor was searching delinquent property records and cross referencing them with death records to identify potential estates to open. The investor would tip off a public administrator who would open a probate estate and then hire the investor. The investor would charge to manage the property and to sell it. Unfortunately, heirs were either not notified of probate estate proceedings or were notified but lost a majority, or all, of their inheritance to the fees charged by the public administrator and realtors.

Technically, there weren’t any laws broken in cases where the probate estate was eaten up entirely by fees. However, the proposed new bills would significantly change that in cases where heirs are taken advantage of as they were here. One of the changes the new bills propose is lengthening the time after a person’s death that a public administrator has to wait to open a probate estate from 42 days to 91 days.  And if a public administrator opens an estate it must be done formally before a probate judge. The public administrator must notify all heirs of the hearing to open the estate and of their rights. Further, if the deceased person’s real estate has outstanding property taxes or is subject to a mortgage foreclosure, notice must be posted at the property itself. If the administrator knowingly fails to provide proper notice the court can impose up to 90 days in jail or a $1,000 fine, or both.

There are also several other new requirements for the public administrator. If the real estate is subject to a tax foreclosure the administrator must provide the county treasurer with written notice of his/her appointment as representative of the probate estate. Even where properties are free and clear, the public administrator can’t sell any real estate without court approval. Additionally, the court will review the propriety of any individuals or businesses hired by the public administrator. The bills expressly label any real estate fees over 10% of the net proceeds payable to the estate as excessive where the real estate is subject to tax or mortgage foreclosure.

On the positive side, there is more court supervision over these types of matters and penalties for public administrators who attempt to exclude rightful heirs. But increased responsibilities placed on public administrators likely means estates will continue to rack up expenses in fees paid to administrators. It’s important to note that before a creditor or public administrator can open an estate certain family members or nominated people with standing are free to do so at any time. So families who’ve lost a loved one should seek the advice of an experienced estate attorney who can guide them through a difficult time.

– Protect Yourself From Popular Real Estate Scams

Last week four people were charged for running a real estate scam in Detroit. Victims believed they were purchasing vacant properties in the area at bargain prices. After victims sent payment they would receive false or forged deeds to a property. The false deeds were illegally filed with the Wayne County Register of Deeds. Victims later found out that the transactions were done without the legal property owner’s knowledge. Early numbers suggest that it happened to over 20 victims involving 19 different properties. Surprisingly, this isn’t the first scam involving real property that we’ve seen in Michigan over the last several years. Sadly, it probably won’t be the last. But there are a few things that property owners can do to help avoid these traps.

In past years, scammers have also mailed or phoned potential victims offering to retrieve important property records for a fee. The fees charged were anywhere from $50 and up. However, the Register of Deeds office will provide property owners copies of documents for a nominal fee. For example, most counties only charge $1-2 for a copy of a deed.

In light of these scams, many Michigan counties are making changes. Some counties now offer an alert system for real estate to help fight against property fraud. It’s designed to alert property owners of any filings or recordings under their name or their business’s name. So if a property owner signs up to receive alerts they will be notified, with a brief description, any time the county records a transaction connected to their name. Most alert systems are offered at little or no charge. Property or business owners should check with the Register of Deeds office in their county to learn more or register for alerts.

Property and mortgage fraud are two of the fastest growing crimes according to the FBI. There are some general tips that property owners can follow to help avoid property scams. Beware of someone asking you to pay large sums of money up-front for their services before you have any written documentation. Sometimes scammers will insist that you wire money up-front. They may even go as far as asking that the money be sent abroad because they are out of the country. It’s also important to visit the property in person. Often times you can also cross check a real estate listing at different websites if a property is actually for sale.

If you’re asked to sign documents that you don’t fully understand seek out an attorney or real estate professional who’s independent from the transaction. Consider using a professional to represent you. Buyers should also consider requiring title insurance or hiring a title company to perform a title search on a potential property. A title search should identify the legal owner and can reveal any liens attached to the real estate. Spending the money on title work could far outweigh losing thousands of dollars purchasing a property without ever gaining legal title. Most importantly, do your due diligence, and if you have questions don’t let them go unanswered.

by: Amanda Bevel

Beware of Obituary Scam

In a popular obituary scam, the con artist begins by searching obituaries from the local paper looking for a recent widow.  A messenger then arrives at the home of the recent widow with a cash-on-delivery package.  The messenger claims that the recently deceased spouse ordered it, and requires immediate payment.

Only after paying for the package, when the messenger is long gone, does the victim open the box and discover that it contains old magazines or newspapers that are worthless.

To avoid the scam, don’t be afraid to ask for more information (i.e. where package is from, etc.) so you can look into it before accepting delivery. A legitimate delivery service will give you information so you can make a decision about accepting the package. If you are still not sure, then don’t accept the package.