With great power comes great responsibility

Today, while I was working with a client, I started describing a few loopholes in real estate and how the law, for the most part, favors protecting the buyers over the sellers. Upon hearing the news, his eyes lit up. He started asking me to implement all of these items to begin a process of screwing over the seller. I told him no. This is not how we work in this industry. Just because we know something does not mean we should act in bad faith and cheat someone else in order to gain something. This is not a zero sum game. He was irritated with me for refusing but eventually understood. It’s odd because he was MORE than satisfied with the situation given situation before I shared my knowledge with him and suddenly, he was not.

This was the first time that this overused adage connected to a deeper understanding. When you become a professional in any field, you now have the knowledge and power that can be used for bad or for good.

I will share with you an example in real estate of someone using great power. Many people do not know this but transferring title on a home is a very simple process. So simple, even a caveman can do it. In fact, I’m pretty sure cavemen used this same method to sell their caves. Instead of paper however, they probably used rocks and a chisel. “Tim house now John house” was the legal jargon used in those times. You’d want your attorney to review the verbiage though because this is very complex language. Alright back to the story. So one man and one unethical notary was able to make millions in a matter of months, how?

Let’s call the scammer Scooter and the notary Notu. You have a house at 123 Main St that belonged to a nice old lady named Mary. Scooter would draft up a legal document called a quit claim deed which grants title from Mary to Scooter. Scooter takes that document to Notu and Notu turns his head to look the other way and signs off on it. Scooter than takes that document to be recorded at the county recorder’s office and voila, within 3 days, the record now has Scooter as the owner of 123 Main St. Mary is never notified about this change so she continues to live there like she has for the last 30 years and is contently ignorant. Scooter now takes this recorded deed and goes to a hard money lender saying he has this home worth, let’s say, $500,000 and it is paid off. Scooter ‘only’ wants to borrow $300,000 and the home can be used as a collateral. The lender thinks, wow, there is a lot of equity in this house so of course we’ll give you the money. Scooter has no intention of paying that money back. Scooter does this about 20 times to 20 other homes and now he has $6,000,000 in his hands. Scooter is happy, he disappears to Cancun to live out his life with his $6M, never to be seen again.

Meanwhile, half a year later, the lenders see they haven’t gotten any of their money so they start sending the letters to the homes and Mary receives a letter saying that there is $300,000 owed and this house will be foreclosed on if she doesn’t pay it. Mary has no idea what is going on, Mary is scared. Mary gets a real estate attorney who gets to the bottom of what happened and finds the illegal quitclaim deed. Mary also has to pay this attorney thousands of dollars. They have to go to court to sort this out and everyday Mary is losing time, money and gaining lots of stress. Eventually the court rules in her favor but she has wasted a lot of time in court and a lot of money for court fees and attorney fees all while Scooter is sipping Mai Tais in Cancun. Mary has been screwed. The lender was screwed. Notu gets caught and goes to jail. Scooter is never found so he is happy until they find him.

So what’s the purpose of this? Knowing how something works to the highest degree allows you to protect yourself, however, it also gives you the ability to work in an unethical manner. Scooter worked in the real estate industry and knew how to cheat the system. We are all professionals in a field, what will you elect to do?




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