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Cash deal for lot may be too good to be true

By ERIC P. FEICHTHALER - Real Estate Law | Mar 9, 2023

Eric P. Feichthaler

Dear Mr. Feichthaler:

I own a lot in Cape Coral and placed a sign outside “For Sale By Owner.” I received a text from someone offering $50,000.

They wrote they have no bank account and have been saving up cash for many years, and wish to give me the money in $100 bills. They said they will prepare the deed transferring the property, and don’t want title insurance.

Their instructions are for me to take the deed to be witnessed and notarized, then they will come over to deliver the cash. Do you see any issues with this?

— Kelly M.

Dear Kelly:

Well, this is an interesting question! A cash buyer with $50,000 that doesn’t want title insurance or any other protections relating to the purchase. From your perspective as seller, there is one goal – received the bargained-for amount. If the end result is a buyer handing you a bag full of cash, there is no problem from a real estate sales perspective.

However, such an offer is highly unusual. No bank account? And they don’t want title insurance? How do they know you own the property with no mortgages, liens or judgments? It is one of those situations that sounds “too good to be true,” and indicates there could be something nefarious happening here. The fact they want to make the transfer of documents and cash at your home is of major concern to me. If you went forward with this transaction, I would recommend you do so at a professional office, bank or other space you feel comfortable. I wouldn’t let anyone in your home that you don’t know. I also wouldn’t keep a large amount of cash in your home when a stranger knows it is present there.

You may be aware that any cash transaction in a trade or business must be reported to the Department of Treasury through Form 8300. Unless you are in the business of selling property, you likely would not be considered to be in business, and would not need to file the form. However, when you go to deposit these funds in your bank, they will be required to report the deposit via Form 8300. Then, if federal agents ask you why you made such a large cash deposit, you would tell them you sold the property to people you met by text. Although you personally may not be in trouble, you may be unwittingly participating in money laundering, which likely is not on your bucket list.

Also, you will still need to report the sale to the IRS and report any profits on your income tax return.

In conclusion, there are plenty of buyers out there willing to pay for vacant lots, which continue to have strong price support. Although your plan may work, the potential danger, for me, would outweigh the benefit of this unusually “simple” transaction. I would highly recommend seeking professional guidance prior to going forward so your exact situation can be analyzed.

Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.