Media

The rising threat of title theft and why you should care

By: Lindsey French
AAC General Counsel

“A Scammer Tried to Seize Graceland. Is This $173.5 Million L.A. Mansion Next?”

“77-year-old man arrested, couple forced to move after their DeKalb home is stolen in fraud case”

“92-year-old Dallas woman loses property after someone forged the deed”

“D.C. man found guilty of using fraudulent deeds to steal property”

“Arizona homeowners falling victim to deed fraud”

These are all actual headlines from across the country within the last year and a half. Real estate fraud has seen a substantial uptick in recent years. In 2023, the FBI reported that there were 9,251 complaints for real estate fraud (more than lottery, sweepstakes, inheritance, data breach, ransomware, copyright and counterfeit, and malware complaints), resulting in losses of $145,243,348. In 2022, there were 11,727 real estate fraud complaints resulting in nearly $400 million dollars in losses. One area where fraud is booming is known as deed fraud or title theft.

In a nutshell, title theft is when a bad actor forges land records conveying title to property they do not own by pretending to be the property owner. One example involves the criminal acting as the landowner, selling the property to an unknowing buyer and pocketing the cash. With the growth of online notarization and electronic recording, it is possible for the criminal to be located overseas and easily disappear. Another instance of deed fraud is when the bad actor steals the identity of the landowner and forges documents to secure a mortgage on the unknowing landowner’s property. The bad actor takes off with the money, leaving the loan payments to the unknowing landowner, often resulting in foreclosure proceedings against the real landowner.

Properties at higher risk of deed fraud include homes without an existing mortgage because mortgagees get paid off before the property owner at the time of a sale. Vacant or mostly vacant properties and unimproved land are also targeted because they are less closely monitored by the landowners. Often the criminal will list the property for a deal that is too good to be true to close the deal quickly. Unfortunately, elderly and other vulnerable populations are frequently the victims of these crimes. High residential property prices and interest rates coupled with a rise in inflation have contributed to the increase in this type of crime. You might be thinking to yourself, “So what? If a deed or mortgage is forged, then it is void and will not be a real problem.” You would be wrong. Fraudulent deeds can take months and tens of thousands of dollars in legal fees to straighten out in the court system, and attorney’s fees can be virtually impossible to recover if the criminal is out of state or overseas.

There are a few ways that a property owner can protect themselves to become a less likely target of title theft, though none of them are foolproof. Many counties offer an alert system to notify you if land records are recorded in the recorder’s office (usually the circuit clerk) on your property. You can contact your county circuit clerk and ask if they offer this type of service. You can also set up a Google alert tied to your property address to alert you if your property is listed for sale online. Also, closely monitor your credit reports and utility bills for unexpected changes.

The American Land Title Association (ALTA) has recommended changes in legislation to allow notaries to utilize the latest technology in verifying identities when notarizing documents. Additionally, ALTA says that while access to public land records must be prioritized, steps should be taken to prevent criminals from using bulk data downloads to commit fraud. Another recommendation is for local land recording offices to have the ability to report obviously or suspected fraudulent documents to local law enforcement agencies rather than having to blindly stamp whatever crosses the desk to be recorded. ALTA also suggests that additional law enforcement resources be dedicated to investigate and prosecute title theft crimes.

Arkansas Attorney General Tim Griffin also recognizes the threat of title theft to homeowners in the state and offered some advice on how to best protect your home from this type of deed fraud. He advises, “Deed fraud can happen to anyone, but it’s most common with vacant homes or vacation houses. The best way to keep your house safe is to keep your private information safe. To do that, you can contact your circuit clerk’s office to see if there are any protections it can place on your deed. Also, consumers can inquire with their homeowner insurance about coverage specific to this issue. And if you believe you are a victim of deed fraud, please reach out to my office at (501) 682-2007.”

Rainwater, Hold & Sexton Injury Lawyers 800-434-4800