How to Protect From Home Title Fraud?
When you're a homeowner, burglars aren't the only crooks you should be concerned about infiltrating your property.
An even bigger theft is home title fraud.
This occurs when a bad actor alters ownership of your property title or deed by putting their name on it. And it can cost you plenty in terms of dollars, the time you'll spend fixing it, and the damage it causes to your credit.
Don't assume home title fraud can't happen to you.
Learn the facts. Know the warning signs. Take action steps if you think you're a victim. Find out how to safeguard your credit, your property and your savings from title fraud. And consider home title monitoring protection.
What Is Home Title Fraud?
Home title fraud is an involuntary transfer of property ownership without the true owner's consent or knowledge.
In this scheme, someone tries to transfer ownership (title) of an owner's property to someone else. Or they borrow money using someone else's property as collateral.
Suzanne Hollander is a Miami-based attorney and part of the real estate faculty at Florida International University. She explains that home title fraud is often misunderstood.
"Home title fraud is essentially a burglar stealing your entire house and maybe even selling it to someone else while you are living in it - and without your knowing about it," she says.
How Does Home Title Fraud Happen?
Hollander explains that property ownership is normally proven by a piece of paper called a deed. Your deed is sent to your county's clerk of courts and recorded in the public records of the county where your home is located.
In many states, for a deed to be recorded, it must be signed by the seller (also called the grantor), two witnesses, and a notary.
(Note that the court clerk verifies that these legal formalities are met. But the clerk isn't responsible for contacting the seller and buyer and confirming that the transaction was voluntary and legal.)
In other words, just because a deed is recorded in the public records doesn't mean it's accurate.
"Home title fraud is a forged deed," Hollander adds. "That means someone signs your name to a deed as the grantor. This makes it appear as if you granted (sold) the home to someone else - the grantee. They get your fraudulent signature notarized and witnessed and sent on to the county recorder. Then, the new grantee is placed on the new deed to the property, showing the new grantee as an owner in the county public records."
And that's where the danger lies.
The deed-fraud perpetrator can now attempt to sell the property to another party or obtain new loans using your property as collateral. That's because the public records show it as titled in their name, meaning a bank's title search would show the name on the deed as the owner of the property.
Consequences Of Home Title Fraud
Make no mistake: Home title fraud is serious. Left unchecked, a victim can lose their home as a result of this crime. And getting the problem remedied can be difficult and quite costly.
"The legal fees required to resolve the consequences can be in the tens of thousands. It will require filing a complaint in court. And the lawsuit involves numerous parties, including your title company, lender, and buyer or seller," says Victor Liu, partner with Clear Skies Title Agency.
Also, victims of title theft and house-stealing can suffer damage to their credit that can take a long time to fix.
Who is at Risk for Home Title Fraud?
Anyone who doesn't physically and virtually monitor their property can fall victim to home title fraud.
Particularly vulnerable are those who suffer identity theft and seniors taken advantage of by fraudsters. Also, those with second homes, vacation homes, or abandoned homes, foreign real estate investors, and heirs or inheritors of a deceased person's estate can become victims.
People who don't practice good cybersecurity measures are also at risk.
"Phishing emails are one way criminals can obtain personal information like social security numbers and passwords from homeowners," Hollander notes.
Armed with that knowledge, perpetrators can jump into a closing to redirect where funds are wired to or pose as the rightful owner to fraudulently sell the home or use it to qualify for loans.
"Obvious targets of these types of crimes are those less comfortable with technology as well as people outside of the country," says Liu.
Watch Out for These Red Flags
"There are several warning signs of title fraud," says real estate attorney Steven J.J. Weisman. "These include receiving a notice for an unpaid water bill, real estate tax bill, or mortgage bill. Receipt of a notice of foreclosure when you always pay on time or don't even have a mortgage is another red flag. And certainly evidence of activity at an unoccupied home or vacation property is another telltale sign."
Notice that utility bills are missing? Has your credit score recently taken a hit? These can also be indications of title fraud.
In addition, watch out for property tax or homeowners insurance information in the mail that lists someone other than you.
"And if someone visits your home to advise you they just bought or leased your home, it's a pretty clear sign you've been defrauded," cautions Charles Gallagher, an attorney with Gallagher & Associates Law Firm, P.A.
Lastly, be on the lookout for any suspicious mail with your home address but lacking your name.
What To Do If You Think You're A Victim Of Home Title Fraud
If you believe you've suffered home title fraud, act quickly. Take the following steps:
- Contact any banking institutions that might be able to freeze the funds. "If the money doesn't reach the fraudsters, the financial harm can be mitigated," suggests Liu.
- Call your county recorder immediately. "Send them your proof of mortgage, deed, and any other material supporting you as the owner," Hollander recommends.
- Report the fraud to local and federal law enforcement, including your local FBI office.
- Contact your title insurance company and learn if your policy covers post-closing forgery. But note that title insurance normally doesn't cover you against title problems that happen after you've closed and taken ownership of the home. "Title insurance protects a homeowner from any defects in ownership or from inheriting any debts attached to your property that may have been incurred by a previous owner," explains Liu. "But it's possible that the fraud occurred before or during your closing, in which case your title insurance policy may protect you."
- Contact an attorney experienced with real estate fraud or title litigation. This expert can guide you on needed additional steps. An attorney will be essential if your property is being sold out from under you or if unwanted tenants or squatters are allowed to remain in your home by the fraudulent owner.
The good news is that you may not be held responsible for bills or debts incurred by the criminal, says Weisman.
How To Protect Yourself Against Home Title Fraud
To prevent home title fraud from occurring, follow these best practices:
- Be careful with emails. Don't click on links or open attachments within any suspicious emails. "Also, don't provide personal information over email, and be sure to verify the sender of emails you receive," advises Liu.
- Use strong passwords - and change them every few months - for all your online accounts.
- Regularly monitor your three free credit reports, available for free annually at annualcreditreport.com.
- Verify your property ownership. "Property records are public records. So make routine inquiries on your county property appraiser and county tax collector's websites to confirm that you remain the owner of record," says Hollander.
- Physically monitor your property. "Visit and check on your home regularly," Hollander advises. "If yours is a vacation home or second home, have a trusted person drive by. Have them verify that there are no persons or activities on the property that you did not permit and there is no for-sale sign posted."
- Think twice before providing your John Hancock. "Be very wary of anyone requesting that you sign documents or instruments you're unsure about," Hollander cautions.
- Take identity theft protection measures.
What Is Home Title Lock And Do You Need It?
There's another way to help preserve proper ownership of your home. Consider subscribing to a title monitoring service like Home Title Lock or Secure Title Lock. These companies work similarly to credit monitoring services in that they consistently oversee the public records of your home.
"They cannot prevent home title fraud, but they monitor the registry of deeds for changes that appear to affect the title of your home," Weisman says.
If the service flags a deed, mortgage, or another real estate document that appears questionable, they alert the owner of the home, says Gallagher. "This service can alert you to the existence of fraud so that you can then address and resolve it on your own."
Gallagher cautions that these services don't provide insurance-type benefits that would cover payment of your legal fees or a temporary alternate residence you may have to shelter in.
While having title monitoring isn't required, it can provide extra peace of mind and convenience to homeowners concerned about the threat of title fraud.
"Using a home title service isn't needed," says Liu. "Homeowners can perform the same monitoring services themselves and save the $15 or so that these services charge monthly."
To self-monitor your title, simply visit the website of your local clerk of court regularly or Google search for your local registry of deeds, recorder of deeds, or land records.