Learn what deed fraud is, how it can happen, where it's increasing, and how to protect yourself from a wrongful or illegal property transfer.
No real estate investor
wants to discover they've been involved in a fraudulent real estate
transaction. But unfortunately, forged deeds and fraudulent title
transfers happen far more often the people might believe. Deed fraud
isn't a new idea. This problem has been around for decades, most
commonly with vacant property and especially involving deceased property
owners, but is becoming increasingly popular in blighted areas with a
large number of vacant, zombie properties leaving property owners and
investors at risk.
Learn what deed fraud is, how it can happen,
where it's increasing, and how to protect yourself from a wrongful or
illegal property transfer.
What is deed fraud?
Deed fraud comes in many shapes and sizes, but in essence it occurs when a property deed
or title transfer is executed and recorded illegally without the
authorization or knowledge of the true and present owner. This practice
is most commonly used with deceased property owners or properties that
are vacant and not being monitored or maintained.
"buyer" takes title to the property by forging the owner's signature on
the deed, either using false identification or a counterfeit notary
signature and stamp. The new "owner" can then rent the property,
move into themselves, or sell the property by transferring title to a
legitimate buyer. If the false transfer and sale happen quickly, the
property can be sold to a new buyer without the current property owner
or heirs knowing it.
thieves will even go so far as to create a fictitious name for the
original deed transfer and then transfer title into their true name to
add a layer of protection from the fraudulent deed to themselves.
Increase in deed fraud
practice has been popular in several states, including Florida,
Pennsylvania, Ohio, Indiana, and Michigan, with the majority of cases
happening in areas like South Florida; Philadelphia and Pittsburgh, PA;
Cleveland, OH; Detroit, MI; or Lake County, IN, which all have a large
number of vacant homes. The increase in title fraud has gotten so bad in
some areas that municipalities are adopting new services that automatically alert property owners when a title transfer has been recorded.
As a note investor, I've witnessed deed fraud firsthand when looking at a non-performing mortgage loan
for a deceased borrower. The title changed hands years after the
borrower passed away. Luckily, from doing due diligence I realized the
problem at hand and knew this was a far bigger issue than simply foreclosing on the deceased homeowner to regain title to the property.
How investors can protect themselves
fraud is most common in vacant homes, particularly vacant properties
that aren't being regularly maintained or monitored. If you own real
estate that's vacant, it's a good idea to have someone go by the
property frequently to check on it and, if possible, set up alerts with
the county recorder's office to alert you if there's any change in
ownership on the property.
If you're in the process of purchasing a
vacant property, do your due diligence before entering into a purchase
agreement or closing on the property. Look at previous title transfers
in public records to see if there was a recent title transfer,
especially a quitclaim deed,
and request that the title company do a thorough check on the current
property owner, verifying multiple forms of identification to prove they
are in fact the owner before closing. Most counties and even some
states don't allow the recorder's office to verify the legitimacy of the
document being recorded, meaning it's up to the closing company or the
investor to verify the accuracy and validity of the document.
you're a victim of deed fraud and your property has been wrongfully
transferred to an illegal owner, the first thing you should do is alert
the county recorder's office of the issue and file a report with the
local authorities. If significant time has passed since the transfer and
the property has been resold, it can be difficult to locate the thief,
especially if they used a fictitious name. This means the most important
thing a property owner or investor can do is monitor and maintain any
property they own or have interest in, especially if it's vacant.
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"I've been a Home Title Lock customer for 2 years. Their customer service is excellent and I most appreciate the comfort that comes from knowing that I will be immediately alerted and assisted if anyone ever attempts to fraudulently use my title."
Property ownership is not just the American dream, it's also the most flexible financial tool to build family prosperity. Home Title Lock ensures that your assets are protected against Title Fraud and Title Thieves.
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