A recent lawsuit in Washington, D.C. demonstrates the potential risks of relying on emailed wiring instructions in real estate transactions. A couple signed a contract to buy a home for almost $2 million. They received an email that looked to be from the title company, asking them to wire $1.5 million to a specific account to cover the purchase price of the home. This was in addition to the $200,000 deposit on the home that they’d already paid. The couple confirmed the instructions by return email and then wired the funds as requested. When they came to the settlement on the house, they discovered that the title company had not received the wired funds. Instead, someone had apparently hacked into the title company’s email system and sent out an email with fraudulent wiring instructions. The wired funds had been stolen.
These scams have happened before, already costing consumers an estimated $1 billion. To avoid being yet another victim, ALWAYS get wiring instructions in person from your real estate or closing/settlement agent – ideally in writing. NEVER rely solely on emailed instructions. If you receive such emailed instructions, ALWAYS confirm them with someone you know at the real estate agency or title company – using a telephone number that you already know and NOT the number that may be contained in the email.
And, if you are in the real estate or title business, advise your clients about these risks and how to avoid them.
Craig Blakeley and Jeffrey Matsuura are attorneys with the Alliance Law Group and active participants with the Chamber's economic development committee.