You may recall that some time ago I wrote about how important it is to re-key the locks on your new home after closing. This is even more important on bank owned homes because most of them are keyed to a “master” key. The Department of Housing and Urban Development is much like a bank in this respect, except that instead of sticking a key into a lockbox, there is a “HUD key.” This means that HUD officials can access any of the roughly 600 homes they own in our local market and the thousands of homes they own nationwide. Realtors can apply to have a HUD key so they can show any units that are currently for sale.

But what happens if one of those keys falls into the wrong hands?

Here in Vegas, at least one person is posing as a real estate licensee with a HUD key. This person is showing the home, taking rental applications, and taking a deposit for a home that is owned by HUD. The scammer pockets the money, and the would-be tenant is left with a lighter wallet. At least we do not have reports of people moving in and paying rent until the Feds show up to evict the trespassing “tenant” — yet.  Similar scams are occurring elsewhere in the nation.

So how do you avoid being a victim of such a scam? First, meet your Realtor at her office, at least the first time. Ideally, she should want to meet you there too! Not only are there safety concerns, you will see that she really works there. A good Realtor will also want you to take a few minutes to sign a paper called “Duties Owed by a Nevada Real Estate Licensee,” or “duties owed” for short. This form doesn’t obligate clients, but talks about the ways the real estate agent is obligated to the clients. It’s a required document for any purchase, listing, or rental, so consider it a sign of her professionalism that she wants to let you know what duties she owes you up front.

Second, take a few minutes to find out who owns the property you want to rent. The records are held by your county recorder’s office. Here in Clark County, you can search online. If it is a bank, FNMA, HUD, or a government office, do not put down any deposit! These properties are almost never available as rentals, so you should consider it a scam until proven otherwise.

While I am fully licensed to assist renters, I do not handle rentals at this time. If you have rental property needs, I will gladly refer you to a colleague who specializes in them and does them right.

Tags: HUD, HUD key, rental scams

This entry was posted on March 16, 2010 at 11:38 am. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Posted in Distressed Property The Law by Bridget Magnus Comments Off