TENNESSEE REGULATORS WARN HOMEOWNERS OF DECEPTIVE “MEMO OF SALE” CASH-BUYER SCAMS
State officials across Tennessee are alerting homeowners to an emerging “memo of sale” scam that traps sellers in costly title disputes. Coordinated warnings from the Tennessee Department of Commerce & Insurance (TDCI), the Tennessee Attorney General’s Office, and industry groups highlight fraudulent cash-buying operations targeting vulnerable sellers, particularly seniors.
How the Scam Operates
Scammers pose as legitimate cash buyers promising fast sales, but they never actually intend to purchase the property. Instead, they record a memorandum of sale on the home’s title with the county clerk. This legal filing creates a cloud on the title, blocking the homeowner from selling to any other party.
Once the fraudulent buyer walks away or refuses to close, they typically demand thousands of dollars from the trapped homeowner just to clear the title. In other cases, unauthorized wholesalers use these contracts to flip purchase rights to third-party buyers while pocketing the financial difference without proper statutory disclosures.
Safeguards for Homeowners
Regulators recommend specific precautions to protect property titles during private cash transactions:
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Contract Review: Inspect sales agreements for memorandum clauses and negotiate explicit timelines for when a memo must be removed.
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Wholesale Inquiries: Ask directly whether the prospective buyer intends to wholesale the property to a third party.
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Licensing Checks: Use the TDCI Public Search tool to verify the licensing status of individuals offering quick home purchases.
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Legal Counsel: Consult a licensed Tennessee attorney if a buyer demands a fee to release a recorded memorandum.
Homeowners who suspect they have fallen victim to these schemes can file a formal complaint with the Tennessee Attorney General’s Office Division of Consumer Affairs.
