Old-fashioned land scams go high-tech
By Haya El Nasser, USA TODAYWed Sep 27, 7:14 AM ET
An elderly woman from the East Coast roams the Arizona desert in search of her land. She's looking for a tidy lot in a subdivision and instead finds an arid wasteland in the middle of nowhere. She gets lost, runs out of gas and water and has to be rescued by a rancher.
She had bought the land on the Internet, sight unseen, according to Mary Utley, spokeswoman with the Arizona Department of Real Estate.
The Internet is reviving a grand old American tradition: land scams. Thousands of lots in phantom subdivisions that were sold decades ago to people who hoped to build retirement homes in warm states are reappearing on online sites such as the Internet giant eBay.
The new wave of land scams has the potential to snooker millions more around the world because of the Internet's broad and instantaneous reach.
Many of the lots being sold have never been developed because they are on swampland in Florida or isolated desert ranchland in Texas and Arizona. There is no road access, water or power. The land might be developed someday, but county officials who are busy processing a surge in deed transfers are skeptical.
"If someone does buy one of these parcels thinking they're going to build their dream home on it now, that's really a problem," says Bart Medley, attorney for Texas' Jeff Davis County.
Land scams are surfacing in:
•Florida. The state has a long history of bogus land deals. In Flagler County, a scam that began in the 1970s was revived recently when the same lots in a subdivision that has yet to be built appeared on eBay. Some paid $5,000 for parcels worth $500, Daytona Beach land-use lawyer Glenn Storch says.
•West Texas. Land there is plentiful, but not always hospitable. Arid acreage in Jeff Davis, Hudspeth and Culberson counties has been auctioned online to some unsuspecting buyers.
"Much of the property was advertised with photos showing things like running water, green trees and green grass - things that simply don't exist in that particular location," Medley says.
•Arizona. "A huge problem," says Utley, whose agency monitors real estate agents and developers. "We actually don't even have enough staff to address it."
Most online land auctions are legitimate and much of the land sold can be developed. Interspersed among those listings, however, are offers for 2-acre and 5-acre lots tagged as "investment property."
Online sites say they just provide the vehicle to list properties.
"The actual transaction happens directly between the buyer and seller," says Catherine England, spokeswoman for eBay, the world's largest marketplace, which lists and auctions properties in its real estate section.
In the 1960s, large land companies set up sales kiosks in cities around the world such as Hong Kong or Singapore, Storch says, "but you had to come to the kiosk to hear the sales pitch." Now, all of it can be done online from the comfort of home and at any hour in any time zone.
Medley has gotten calls from as far away as Belgium.
There is nothing illegal about selling worthless land to someone who's willing to pay. The key is to tell them what they're getting, Storch says.
West Texas is particularly attractive to land-scam artists. There is plenty of land, and county governments are small and ill-equipped to crack down.
The county clerk in Jeff Davis County is processing dozens of deed transfers on ranchland that can't be reached by car. The same lots were sold years ago to unsuspecting buyers who stopped paying property taxes when they realized they owned a worthless patch of dirt. The county took possession and sold the lots in one chunk. The new owner is selling the lots online.
"We're going to wind up taking some of these plots back," Medley says. "Eventually, we'll have to clean up the mess. ... These scams are defrauding people out of their hard-earned money."
Kit Bramblett, county attorney in neighboring Hudspeth County, says cracking down on bad sales is tough. "Even though I can't find your land out there, I can't find any laws that will allow me to jump on anybody," he says. "I can't make a criminal act out of that."
Some of the Internet sales listings make it clear that the land can't be built on unless the owners find a way to supply water, sewer service and electricity. Others don't. Many tantalize with beautiful descriptions and pictures.
Medley cites the old adage that beauty is in the eye of the beholder but "I want to meet the person who looks at this (land) and thinks it's beautiful."
Arizona state law requires anyone selling more than five lots in a subdivision to file an application and public report listing details such as road access and utilities.
"A lot of times, one lot will be sold three or four times over the Internet," Utley says. The agency is investigating numerous complaints filed in the past two years.
A Texas law prohibits subdividing land for residential use into small parcels without providing water, sewer, electricity and road access, Medley says.
"Many of these people are reselling these plots for the third or fourth time and they have absolutely no idea they're breaking the law," Medley says - especially someone in another country.
Until there's a complaint, he says, he can't get an injunction to stop the transactions.
Government scrutiny of companies that do large-scale developments is greater than on individuals who are selling single plots, says Tom Collier, president and CEO of the Better Business Bureau of Southern Arizona.
"That's when the buyer really, really needs to beware," Collier says. "People fancy themselves out on their porch watching the deer and antelope play."