Sunday , January 29 2023
San Bernardino County officials warn residents of real estate scam

San Bernardino County officials warn residents of real estate scam

San Bernardino County Auditor-Controller/Treasurer/Tax Collector Ensen Mason and Assessor Recorder-County Clerk Chris Wilhite issued a joint warning to county homeowners of a property scam where homeowners are duped into assigning a 40-year lien on their property in exchange for an upfront cash payment. The scam is called a Homeowner Benefit Program.

The scam works like this: a Florida-based real estate company offers homeowners up to $5,000 cash in return for the homeowner signing a Homeowner Benefit Agreement. This agreement gives the real estate company the exclusive right to serve as the listing agent, receiving a 3% commission when the homeowner decides to sell their home. When the agreement is signed, the real estate company files a lien with the county Recorder’s office.

If the homeowner dies or gifts the property to another person, the heir or new owner is obligated to the terms of the contract. If the homeowner wishes to cancel the agreement or avoid listing their property with the real estate company, they must pay an early termination fee equal to 3% of their home’s value (the amount the company would have received upon the sale of the property).

Unfortunately, according to the County, this arrangement is perfectly legal.

“A couple thousand dollars may seem like a lot of money to someone in financial need, but what they don’t realize is that the median listing price of homes in San Bernardino County was nearly a half-million dollars in November 2022,” said Ensen Mason. “At that price, the 3% fee obligation to the company would be $15,000! With up to 40 years of future home price appreciation, that fee could easily grow to six figures.”

“In my opinion, this is fraud,” Mason continued. “It is presented as a listing agreement when it is really a loan with an astronomical interest rate. As an example, a homeowner with a home value of $500,000 who receives a $1,500 upfront cash incentive to sign the Homeowner Benefit Agreement will owe the company a 3% commission worth $15,000, essentially paying back the $1,500 incentive at an interest rate of 900%”.

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