Careful, Scammers! How Real Estate Agents Profit from Tenants

The real estate market is an endless treasure trove of victims for scammers. The number of fraudulent schemes is innumerable, from deals with real estate agents when searching for an apartment to living in an apartment.

Georgy Nefedovsky, attorney

Scam #1 — the most common

The most popular scam among real estate agents involves the agent, when concluding a contract with an apartment seeker, listing information services as the subject of the contract, and charging full payment upfront according to the terms of the agreement.

As a result, the tenant receives nothing from the real estate agents except addresses of fake listings and blocked phone numbers.

The essence of the scheme is that the contract with the real estate agent is drawn up legally and it is impossible to get money back or recover it, since agents do not provide guarantees for apartment selection, but only offer information about possible options published in open sources.

A real estate agent can carry out such fraud with a potential tenant two or three times in a row, until they extract all the money possible, and then simply disappear and stop responding to messages.

You can avoid this scheme in the following way:

• only deal with verified real estate agencies;
• carefully review the contract, especially its subject (if you have questions about the contract and do not trust the realtor, it is better to consult a lawyer).

Scam #2 — daily rental

Scammers rent out apartments on a daily basis and then post advertisements for long-term rental. Around the apartment, artificial hype is created: an attractive option is offered for a modest price, and multiple applicants are invited for a viewing.

When signing the real estate lease agreement, ownership documents are naturally not shown by the landlord under the pretext of being in a hurry, forgetting, and so on.

Many tenants are so eager to rent the apartment that they believe on word alone — sign the papers and hand over money, no matter what. After this, the scammer disappears, and several days later, the deceived people encounter the actual owners of the apartment in the hallway on their way to the kitchen.

To avoid this scam, it is necessary to always carefully verify the rented apartment through open sources and never sign a contract without reviewing the original documents for the apartment.

Scam #3 — reselling the apartment

Often, scammers manage to resell the same apartment to several trusting tenants: some are tricked in the morning, others at lunchtime, and the third in the evening. All these people receive keys in their hands and expect to move in the next day. Instead, they face fellow victims at the door. An indirect sign of such a scam can be a request to pay for several months in advance.

Scam #4 — collusion between the owner and the realtor

A fairly popular scheme involving a collusion between the apartment owner and a real estate agent. The property owner and the agent rent out the apartment, split the agent’s commission, and then, under a fabricated excuse, evict the tenant. After that, they look for new victims and receive double profit. The gains are substantial: the agent's fee is usually equal to the monthly rent.

In a standard lease agreement, it is stated that the landlord can terminate the agreement without financial loss in four cases:

• if the tenant is late with payment by three days;
• due to damage to property;
• due to systematic violations of neighbors’ rights (noise, unsanitary conditions);
• due to using the apartment not for its intended purpose.

Landlords come up with cunning schemes to evict tenants earlier than the term. They spare no effort to create unbearable conditions for the tenant. Everything is used: secret damage to furniture, bribing local homeless people who pretend to be the tenant's friends, making noise in the entrance and stirring up neighbors against them, to artificially provoked utility emergencies. After that, the owners conduct out-of-hours inspections at the most inconvenient time, act out righteous anger and force residents to move out. In communal apartments, neighbors may be involved in the collusion.

In this case, tenants need to remain vigilant and record everything that happens on video, as well as involve police officers and professional lawyers who will help gather the necessary evidence and terminate the contract without financial loss.

Scam #5 — renting an apartment with shared ownership

Often, tenants become victims of family conflicts. Renting an apartment from the owner, they check all documents, sign a contract, but don't pay attention to the fact that the apartment is owned in shared ownership by several people. Later, it turns out that one of the owners decided to rent the apartment without informing the other and not sharing the profits.

In most of such situations, the landlord does not consider himself a scammer. He did not intend to deceive the tenant. The other interested party unexpectedly shows up or finds out about everything from neighbors.

In any case, for tenants who become victims of the conflict, there is little pleasant about it. At minimum, they face a scandal at first encounter, and possibly even communication with the police. What happens next will depend on whether the relatives can settle the matter amicably. Otherwise, tenants may be forced to move out (the contract is invalid without consent from all owners) or pay more for the apartment — taking into account the interests of the other owner.

How to Avoid Being Scammed

To prevent abuses by the apartment owner, it is necessary to clearly specify all obligations of both parties in the contract: in what condition the appliances and furniture are (with a valuation in rubles), who pays for repairs if the cause of damage is wear, who has the right to be in the apartment (guests of the tenant, their relatives), whether pets are allowed.

Besides that, you can get to know your neighbors in the entrance or communal apartment beforehand. If the owner of the apartment has a bad reputation, they will surely be in the know. And they will warn you about the endless hassle with other residents.

However, it is impossible to guarantee protection from scammers. Tenants can only minimize risks through attention, experience, and intuition.

When signing a lease agreement, the owner of the apartment must show the tenant the following documents:

• original ownership documents for the apartment,
• original passport of the apartment,
• original passport of the owner,
• valid power of attorney to rent out the apartment from other owners,
• paid utility bills.

In addition to the contract, copies of ownership documents and the owner's passport should be in the tenant’s possession. Furthermore, the tenant must not forget about the acceptance and transfer act for the apartment or room and a receipt for money received. Each monthly payment must be documented on paper with signatures from both parties and the date.

Photo on cover: MART PRODUCTION\Pexels