Home title theft and title piracy
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Home title theft is a form of real estate fraud where a criminal uses a homeowner’s personal information to forge a deed and illegally claim ownership of the home. The thief might then apply for a home equity loan or line of credit in the homeowner’s name, fail to make payments, and expose the owner to foreclosure and credit damage. In some cases, especially with unoccupied homes like secondary residences, the fraudster might sell the property without the owner’s knowledge or rent it out without permission.
How Does Home Title Theft Happen?
Criminals commit home title theft using several methods, including:
- Phishing Schemes: Criminals pose as legitimate entities to trick homeowners into revealing personal information through emails, letters, or phone calls that appear to be from trusted sources.
- Malware: Malicious software installed on a homeowner’s computer without their knowledge can be used to access personal information.
- Data Breaches: Personal information stolen from companies or organizations can be sold on the black market or used to commit home title fraud.
- Unsecured Wi-Fi Networks: Criminals can access personal information through unsecured home or public Wi-Fi networks.
- Mail Theft: Thieves steal mail to obtain personal information, such as birth dates and Social Security numbers, which they can use to commit fraud.
- Loss of Documents: Losing important documents, such as deeds or mortgage statements, can lead to home title theft if they fall into the wrong hands.
What Happens If a Property Title Is Stolen?
If a property title is stolen, the homeowner may face the loss of their home through unauthorized sale or foreclosure. Even if the theft is discovered before the property is sold or foreclosed, the homeowner may still encounter legal issues, credit damage, and financial instability. To mitigate these risks, the homeowner should:
- Contact the Three Main Credit Bureaus: Request a fraud alert on your credit file and dispute any unauthorized accounts.
- File a Report with the Police: This creates a paper trail that will be helpful if you need to take legal action.
- Close Unauthorized Accounts: Notify lenders of the fraud and close any fraudulent accounts.
- Contact Your Mortgage Lender: Alert them to prevent future financial harm and foreclosure.
- Retain Related Records: Keep all correspondence and documents related to the theft.
Should You Be Worried About Your Own Title?
While home title theft is less common than other types of identity theft, certain factors increase the risk, including:
- High Home Equity: Homeowners with significant equity are more likely targets.
- Multiple Properties: Owners of vacation homes, investment properties, and other unoccupied real estate are at higher risk.
- Seniors: This demographic is more susceptible to home title theft and other forms of identity theft.
- Lack of Monitoring: Homeowners who do not regularly monitor their financial records and credit reports are at greater risk.
Signs of Potential Home Title Theft
Be vigilant for these warning signs:
- Receiving bills or collection notices for accounts you didn’t open.
- Being denied credit due to unrecognized information on your credit report.
- Receiving IRS notices about unpaid taxes.
- Getting calls from debt collectors for debts you don’t owe.
- Discovering your home has been rented out or sold without your knowledge.
How to Protect Yourself from Title Fraud
To protect yourself from home title theft:
- Keep Track of Your Mail: Report any sudden stop in mail delivery and ensure important documents are stored safely.
- Monitor Your Credit Report: Regularly review your credit report for suspicious activity.
- Protect Personal Information: Shred unwanted documents with personal information, avoid carrying sensitive documents unnecessarily, and only share personal information with trusted sources.
- Watch Your Property: Report suspicious activity around your home and consider installing a security system.
- Get Owner’s Title Insurance: Purchase coverage to protect against liens or claims filed against your property. Be cautious with title protection services, as they can sometimes be fraudulent.
What Is a “Title Pirate”?
A title pirate is a person or entity that commits title fraud by creating the false appearance of legal ownership of a real property they do not actually own. This is typically done by recording fraudulent or forged deeds or similar documents that purport to convey title to a property.
Title pirates often use falsified documents, such as forged driver’s licenses or Social Security cards, to pose as the property owner. If the property is owned by a limited liability company (LLC) or corporation, the title pirate may use a forged signature or other falsified documents to present themselves as authorized to execute documents on the company’s behalf, facilitating the fraudulent transfer of title.
Once they have successfully forged the title, title pirates may profit in various ways, such as securing loans against the property, renting it out, living in it temporarily, or even attempting to sell it to an unsuspecting buyer.
How Common Is This Scam?
Title piracy has been on the rise, particularly since 2020. The increase in remote and mail-away closings, along with the rise of remote notarization in the post-COVID era, has made it easier for title pirates to commit fraud. This issue has been notably prevalent in South Florida in recent years.
Who Do Title Pirates Target?
Title pirates typically target vacant parcels of land, as these properties are often unmonitored by their owners, who may live out of state. After recording fraudulent documents that claim interest in the title, the pirates usually seek to borrow money against the property, often under the pretext of securing a construction loan. Once the loan is obtained, they abscond with the funds, leaving the lender with a property that the borrower does not actually own.
Properties with recently deceased owners and investment properties held by holding companies are also common targets. For example, in May 2018, a group in Broward County, Florida, was arrested for using forged quit claim deeds and powers of attorney to fraudulently take title to 44 homes, 18 of which were owned by the estates of deceased individuals. The group rented, attempted to sell, or even lived in these properties.
What Can Real Estate Professionals Do to Protect Their Clients?
Real estate professionals play a crucial role in protecting their clients from title fraud. Attention to detail is key. They should scrutinize the documentation provided by all parties, especially documents substantiating identity or authorizing actions on behalf of a company. Any discrepancies or irregularities in the documents should be investigated immediately, and professionals should always err on the side of caution.
Real estate professionals should also insist on collecting multiple forms of contact information and verifying its validity. Opting for in-person closings rather than remote or mail-away closings can reduce the risk of title piracy, though this may not always be feasible. Using an in-person notary whom the real estate professional knows and trusts is another important safeguard.
What Should You Do if You Become a Victim of a Title Pirate Scam?
If you fall victim to a title pirate scam, you should immediately contact a lawyer to discuss the quickest and most effective way to clear your title. If you have title insurance, you should initiate a claim with your title insurance carrier. Additionally, contact your county clerk's recorder’s office to report the fraud and seek their guidance on further steps to protect your property.
Are There Other Scams Real Estate Professionals Should Warn Their Clients About?
In addition to title piracy, real estate professionals should be aware of other scams such as wire fraud, in which hackers intercept and alter wiring instructions, causing clients to wire funds to fraudulent accounts. They should also warn clients about scams involving fake rental listings, phishing emails, and identity theft related to real estate transactions. Educating clients about these potential threats and advising them on how to verify information and secure their transactions is essential in safeguarding their interests.