By Rebecca M. Vaccariello –
What is it?
Deed fraud is a relatively new crime whereby someone deeds your property out from under you. A forged deed, which is often a quitclaim deed, is the manner in which the transfer occurs. The true owner may be unaware of the filing of the deed transferring the property for some time, which could complicate matters by allowing multiple transfers to potentially take place.
Deed fraud typically involves vacant land or a vacant house and foreign or seasonal owners. The criminals take advantage of the fact that the owner of the vacant property is an easy victim. Such an owner may be unaware of the transfer until they go to sell their property, or return to the home after an extended absence and find locks changed and individuals living in their home. At this point, the true owner is forced into a situation where they have to regain legal title to their real property.
A clerk is required to record deeds that are valid on their face even if they look suspicious. The true owner of property may be unaware a deed has been filed, transferring ownership to another person, and collecting money for the sale. The true owner’s name is forged and the notary and witnesses may or may not be part of the fraud.
There are multiple varieties of deed fraud and the new “owner” of the property may or may not be involved in the fraud. In some cases, an unknowing third-party pays the seller, who is impersonating the true owner, for the property and is unaware that the deed is forged. In other cases, the criminals are on both sides of the transaction and then proceed to later transfer the property to an unknowing third-party. In this situation, the “buyer” is a straw person who then re-conveys the property to an innocent third party buyer soon after the initial transaction. Other times, the criminals are both sides of the transaction and ultimately stay in title, possibly after multiple fraudulent transactions.
What Can You Do To Prevent
Becoming A Victim?
This crime is growing more prevalent, which has encouraged some clerks who file land records to offer new options to property owners. Miami-Dade County Clerk of Courts now sends a letter to the property owner whenever a quitclaim deed is recorded against a property, because it appears that quitclaim deeds are the primary type of deed used in deed fraud cases. While a warranty deed guarantees that the grantor owns title to the property, a quitclaim deed transfers the grantor’s interest in the property, but does not make representations as to the validity of title in the grantor. New York City has launched a voluntary program where property owners can sign up to get an alert whenever a property-related document is filed.
If your home is going to be vacant for a period of time, you should have the property checked periodically to ensure that a third party has not moved in unbeknownst to you and changed the locks.
You should also check land records where your property is located to regularly ensure that your name is shown as the owner of your property. Deed fraud is similar to identity theft, and just as everyone is becoming more aware of the need to regularly check their financial accounts, people also need to search land records to ensure there are no documents they are not aware of. Beyond deed fraud, a criminal could also attempt to take out a mortgage in a property owner’s name and this is another reason to check land records.
A red flag to watch for is if you stop receiving property tax bills. If this occurs, you need to immediately determine why you have stopped receiving the bills.
Upon purchasing a property, property owners can purchase title insurance. You should check with your title insurance agent regarding protection of your interest in the property should deed fraud occur.
Similar to identity theft, it is unfortunately the case that most people will not be able to prevent deed fraud from occurring, but at most can take steps to quickly learn when the crime has occurred. A long passage of time complicates matters because the property could be transferred multiple times, requiring the true owner to go through many layers of transactions to attempt to regain their legal right to the property.
What Can You Do If You Are a Victim?
If you discover that your real property has been the subject of a deed transaction you are unaware of and did not authorize, you need to immediately contact the police and report the crime. Unfortunately, the police may not be able to resolve the matter for you, especially if the criminal is in a foreign country. It is also important to immediately assert your true ownership to the land in question and for this you will usually need to contact an attorney. While it is important to file a police report, in many cases civil litigation to restore your legal title will be necessary. One of the first things the attorney will do is check to see if you have any insurance coverage for this type of crime, including title insurance as referenced above. If you do, the vast majority of your costs and recovering your property may be covered by your insurance. The most important thing is to act quickly in the event that you discover you have been a victim of deed fraud.
This Article does not constitute legal advice and may not be relied upon as such. Each individual’s facts and circumstances are different. If you have any questions regarding your particular situation, please consult with legal counsel.
Salvatori, Wood & Buckel