Savvy thieves are able to forge documents, commit fraud, and steal the title/deed to your home, potentially to sell the property to someone else and reap the proceeds, or use their fraudulent ownership to access a lending tool and extract the home’s equity.
Such an occurrence is extremely unlikely, as it would be difficult to pull off successfully, and there are ways for homeowners to protect themselves.
The urge to panic, however, is fed by a steady stream of posts and ads on social media sites, including Twitter and Facebook, warning that homeowners should consider title theft an imminent threat.
“The FBI is now calling ‘title theft’ one of the fastest-growing white-collar crimes in America,” screams one post on Twitter. “Don’t become a victim of home title theft! Protect yourself, your family, and your property … ,” warns another post on Facebook.
These posts and ads come from companies that sell a product they describe as title lock insurance—and their aggressive marketing has produced a backlash that has experts and some media warning the products aren’t necessary, and don’t provide any meaningful protection or value.
Let’s dig a bit deeper into the key issues for homeowners: whether title theft is a likely threat; how it works and what could result; whether a homeowner is protected by law as the “true” owner; whether title insurance is necessary or advisable, and the best steps homeowners can take to protect themselves.
Is Title Theft a Concern or Likely Threat?
- Title theft is not a likely threat because it’s difficult and complicated to achieve in most municipalities and states. However, it is a concern because it can, and does, happen.
- Connecticut is one of five states that require witnesses to the signing of property deeds along with an acknowledgment by a notary public or commissioner of the superior court. One of the witnesses can be the notary, as deeds in property transactions in Connecticut and most other states are required by law to be notarized. So the primary safeguard against title theft in Connecticut is requiring a notary to take the sellers’ acknowledgments on the deed when the sellers are conveying the property or mortgaging it.
How Does Title/Deed Theft Work?
- Anyone can log onto a land records website covering many Connecticut municipalities, including Litchfield, and download a legal description of a property for $2 that can be used to create a fraudulent deed.
- The signatures of rightful property owners can be sourced from publicly available land records, allowing perpetrators of fraud to mimic them as the sellers of the property. Armed with a fraudulently created deed and conspirators to impersonate and/or copy the signature of the real owners, the fraudsters are able to transfer or sell a property by recording the transaction in the land records without the knowledge of the actual owners. This might involve the help of an unscrupulous attorney and notary—or it might involve duping a notary. So a small team who know what they’re doing can create havoc.
- It’s also worth keeping in mind that while Connecticut doesn’t allow remote notarizations, they are being allowed currently as part of Gov. Ned Lamont’s COVID executive orders.
What Could Result from Deed/Title Fraud?
- In one case that made the news, Long Island homeowners returned from a lengthy vacation in Europe to find someone else living in their house. The new residents said they had bought the property.
- In 2020, a Long Island man was sentenced for a deed fraud case in which he stole a vacant Brooklyn brownstone worth more than $1 million from a retired teacher.
- Another case recently featured by a Los Angeles TV station is chilling. Carron Payton, a disabled woman who owns property in central LA, received a notice from the county office saying she had gifted her house to a man named Frank Galvan. He had an accomplice who signed the deed as Payton, according to the TV report, which speculates that a fake driver’s license was part of the fraud, as the notary did check the woman’s identification. Payton filed a police report, a complaint with the county, and hired a lawyer. Galvan had moved the property through a couple more paper transaction and then refinanced to remove a substantial sum of money. The lender in that transaction is suing the real Carron Payton, and her lawyer said it will take at least another year to straighten things out.
Are You Protected as the True Owner of Property Taken Through Fraud?
The answer is yes, though the process of exposing the fraud and reversing its impacts can be difficult.
- You still own the home because any deeds conveying it to another party are fraudulent, as is your forged signature.
- Those involved in the scheme have committed criminal acts and can be prosecuted.
- An attorney can help sort out the situation effectively and as quickly as possible.
Is Title Insurance Necessary Or Advisable?
Those who argue that title lock insurance isn’t necessary or worth the cost cite the reasons above in explaining why defrauded homeowners can take comfort. Beyond that, their principal argument has been this:
- Title lock insurance isn’t insurance at all but rather a deed monitoring service that periodically reassures homeowners all is well and alerts them in the event of suspicious activity. If a problem does arise, the services typically offer no resolution assistance. A property owner who has been defrauded should retain an attorney to pursue the matter.
What Are The Best Steps Homeowners Can Take To Protect Themselves?
Those purchasing properties in Connecticut are not required to obtain owner’s title insurance, which protects the buyers from negative outcomes caused by title defects, which might include liens, boundary issues, back taxes, and estate or probate issues. Lenders who make loans secured by mortgages invariably require title insurance to protect the validity and priority of their mortgages.
In the past, title insurance has not typically covered future fraud or title theft, but in Connecticut and many other states homeowners can now obtain title insurance with enhanced fraud protection. It is only offered for improved property—not lots or undeveloped land—and adds an extra 10 percent to the premium cost.
The other option for established homeowners who fear title theft involves finding one of the so-called title lock companies that now do offer to pay the legal fees of clients who have been victimized by title/deed fraud.
If you have concerns about your property’s title, deed fraud, title theft, or any other issue related to real estate and property ownership, contact me via the button below, or get in touch with any member of Cramer & Anderson’s highly experienced team of Real Estate attorneys.