November 15, 2023
Needham, MA--It’s difficult to imagine how a thief could steal a whole house and get away with it, but selling a house out from under its owner has recently been identified as one of the newest scams in the real estate industry.
There are a couple of reasons scammers are attracted to this type of fraud of late. One is the advent of the anonymous real estate deal. Technology – fueled by changes driven by the pandemic– has made real estate less local and “known” and far more anonymous, as the buying and selling of real estate, mortgage applications, and closings are increasingly conducted online. Anonymity gives fraudsters an opening they can and will exploit.
Let’s take a look at how prevalent this type of fraud is, what types of properties fraudsters target, what property owners can do to protect their ownership rights, and how lawyers and title agents like Kriss Law/Atlantic Closing & Escrow are the first line of defense for homeowners.
Rare and targeted
Deed theft is in fact a rare type of fraud, but it is incredibly targeted. Fraudsters are looking to commit deed theft in situations where less attention is being paid to the property. This could include:
- Vacation homes occupied only a portion of the year by out-of-state owners
- Empty lots or undeveloped land
- Properties where owners are recently deceased, and the home is tied up in probate
- Elder abuse, where family members attempt to illegally reassign deeds to themselves
The fraudster, using public records, engages in identity theft by creating fake documents and assuming the identity of the real owner. They then file false deeds at the courthouse assigning the property to their new personae. Using these falsified documents, they attempt to sell the property to an unsuspecting buyer or apply for a mortgage or home equity line of credit on the property. In both cases, they disappear with the proceeds, burdening the property with new liens.
As noted, deed theft is rare, but if you find yourself in the position of owning a property that might be subject to fraud there are some red flags that may alert you to the fact that something is up.
Pay attention to your mail
If someone has stolen your identity, you may receive unexpected queries from lenders or title companies who are trying to ascertain ownership of the property. Always respond quickly. This is especially true if you are heir to a property in probate. Make sure you review all communications that are coming to your deceased relative as you move through the probate process.
Check your credit report
Track your credit report to ensure there are no unusual queries, added liens or unexpected debts. Identity theft services can set up alerts that will notify you if there is unusual activity attached to your credit report. This is the surest way to know if someone is accessing your identity information for nefarious purposes.
One of the best protections against property being sold, rented or mortgaged out front under you is to have a trusted neighbor near the property who can report any suspicious activity. Selling a property often entails professionals like appraisers, inspectors, and surveyors visiting the site and having a savvy neighbor paying attention to such activity can alert you before a deal is consummated.
Title Insurance: The first line of defense against fraud
One of the most important protections all property owners have against fraud is title insurance. During the course of a real estate transaction, a title agent performs a search of the title on behalf of buyer to ensure the title has no liens against it that would prevent the buyer from gaining full ownership rights to the property. This work is also done on behalf of the lender to ensure the lender would be able gain access to the property should the borrower default.
During this title search and subsequent review of the documents, a title agent who is highly trained in identifying fraud in a transaction often detects fraudulent deeds or ferrets out inconsistencies in the documentation, putting an immediate stop to the transaction. This important work of title agents prevents thousands of fraudulent transactions from moving forward.
At Kriss Law/Atlantic Closing & Escrow we are dedicated to protecting our clients’ transactions and ensuring their homeownership rights. Contact us today to learn how we can help you with all your real estate needs.