Published yesterday by Fox News is just another story of what has impacted the real estate industry for the last couple of years, wire transfer fraud schemes.  In this case it was a New York State Supreme Court judge who was scammed when trying to sell her apartment and buy another.  Fox News reported that “A New York State Supreme Court judge was scammed out of more than $1 million after she was duped…. [The judge]…received an email she thought was sent to her by her real estate lawyer….The money was [ultimately] forwarded to Commerce Bank of China…. [The judge] has not publicly commented.”

As we have reported in the past it is important that anyone involved in a transaction involving wiring of funds not rely on emails for wiring instructions.  You also need to be verifying and confirming wiring instructions with your original known reputable source before any funds are transferred.  Alerting all parties to the transaction of the potential schemes, especially clients, and setting up requirements regarding the transfer of funds early in the matter is important.  If possible, enter into a “no payment change” rule with the parties and attorneys involved in the real estate transaction well before the closing; once the method and amounts of payments are set and agreed upon, no changes should be tolerated without a substantial delay to reset and confirm, and without a hold harmless agreement already in place.

Along with this security planning, you need to be sure you have proper insurance coverage to help pay for the expenses and losses that may be incurred by you.  Most policies like professional liability, comprehensive general liability, and business owner’s do not provide adequate coverage or sufficient limits.  Separate cyber coverage and separate crime/fidelity coverage are often necessary.

This article was originally published on June 22, 2017 by CATIC.