Beware of buyers who flash the cash

A new breed of Costa con man is preying on gullible sellers, stealing money and even houses

Sunday Times Home Section, 24 June 2007

These are testing times for Britons with property to sell in Spain. There is a glut of homes on the market; properties are taking longer to sell, and prices in many popular areas are stagnant or falling. To cap it all, sellers are increasingly falling victim to scams.

Desperate sellers make soft targets, which is why the tricksters are doing so well. Then there’s the rise of the internet: websites that bring together buyers and sellers may inadvertently make it easier for those up to no good to contact large numbers of sellers quickly and cheaply. Whatever you may think of estate agents in Spain, they do at least offer their clients some protection.

There are two main types of swindle at the moment, and both take advantage of the fact that under-the-table cash payments are still a regular feature of Spanish property transactions.

The most common scam, known as a “rip deal”, originated in France and has spread into Spain. It works like this: people posing as buyers contact you, pretending to be keen to buy quickly, without viewing, no questions asked. They give you some spiel about having to pay the reserve deposit in cash, normally dollars or Swiss francs, which, they argue, you can easily change at the bank.

And, since you will have to change the deposit anyway, they ask if you wouldn’t mind advancing them a further amount – €100,000, say – in return for a hefty commission. The next step is a meeting in a swanky hotel somewhere like Barcelona or Milan to do the deal. You return home with a bag full of worthless counterfeit notes.

Ian Ainsworth, 37, from Bolton, but now living in Sanlucar de Barrameda, on the Costa de la Luz, has been contacted three times about a family property in Sotogrande, near Gibraltar, that he is selling.

“Once it was a Nigerian calling me on a French mobile, but recently it was someone from North Africa on an Italian mobile,” he says. “They often want to buy without viewing, which is an obvious sign of trouble, and they always ask if you are willing to accept a large amount in cash. Last time, I played along with it for a while, until they told me I had to go to Monaco at my own expense.”

A rip deal doesn’t always involve foreign currency. Sometimes, the seller is asked to change €500 notes into smaller denominations. Again, the money turns out to be counterfeit. The €500 notes are jokingly known in Spain as “Bin Ladens”, because when the single currency was introduced, everyone knew they existed, but nobody had actually seen one.

Now, thanks to widespread corruption and tax evasion in the country’s real-estate sector, there have been more sightings of “Bin Ladens” in Spain than of the man himself in Afghanistan. They are ideal for Marbella-style backhanders and under-the-table payments.

Although it can prove expensive to fall victim to such a scam, the seller still has a property at the end of it. Not so with another trick that centres on the common practice of declaring to the authorities only part of the sale price and paying the rest in cash. Normally, this extra payment, known as “B” money, is paid in the notary’s office where the sale documents are signed – after he has left the room.

How many people would notice that they were being paid with counterfeit €500 notes? And even if they did, what good would it do? By then, the deeds would already have been signed, and calling the police would not be an option – the victim would have broken the law.

Vince Barnes, 42, a professional musician from Newcastle, has two properties for sale on the Costa Blanca. He was contacted by someone from the Ivory Coast who, after an initial call, came down from France for a viewing and offered to buy both.

“The total price was €480,000, which he didn’t question,” Barnes says. “He wanted to pay €160,000 in cash, and declare only 66% of the value on the deeds. He said the cash would be in €500 notes, but added that he had to improve the colour of the notes and remove some serial numbers, all the while claiming they were perfectly legal. I think he took me for an idiot.” One hapless German expat selling his luxury villa on the Costa Blanca was less astute, and paid dearly for his mistake. As part of the deal, he agreed to take €400,000 in cash and to change the same again into smaller notes. It was only after he had signed the sale contract and changed the money that he realised some of the notes he had been given were fake – and that he was €400,000 down.

Pulling out was not an option – he had also signed a contract agreeing to pay €800,000 compensation to the swindlers if he went back on the deal. He couldn’t very well go to the police: he would have been in trouble for money-laundering and tax evasion.

Nobody knows how many people have fallen for these scams, since, like the German, most have an incentive to keep quiet. Last year, the police in Barcelona announced they had uncovered 16 rip deals, carried out by gangs from eastern Europe, with a total value of €3m. This was probably only the tip of the iceberg: many British owners advertising their Spanish properties for sale online are being contacted by swindlers posing as buyers.

So, if you are trying to sell a property in Spain – or elsewhere in Europe – how can you attract real buyers without falling for one of these scams? The answer is simple: make clear from the outset that you will not accept any part of the payment, however small, in cash.

And remember: if a deal sounds too good to be true, that is probably because it is.

© Mark Stucklin (Spanish Property Insight)

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