How to Avoid Illegal Transfer of Property by Forgery?

Identity theft is a significant problem worldwide: our personal information is sold on the dark web, and fraudsters collect fragments of that information until they can cobble together enough to take out loans, use medical services, or cause havoc using another person's identity.

Imagine arriving at your vacation home and finding someone else living there – or learning that your mother's house was sold illegally just days after her funeral.

Similar to identity theft, some may attempt to impersonate a property owner to steal a home or land through real estate fraud. While rare, deed fraud takes place about 10,000 times a year in the U.S., representing $350 million in losses, according to the F.B.I.

How to AvoidIllegal Transfer of Property by Forgery

Illegal transferring ownership of property requires some sophistication. Fraudsters may watch newspaper obituaries or be familiar with neighborhoods – particularly those with vulnerable populations like seniors. When they find a vacant property, the following events take place:

• Keys are made to access the property.
• Property records are searched to identify and begin impersonating the owner.
• Utilities are turned on in their name (or the name of an accomplice or a false name).
• The property may be rented to unsuspecting people.
• The thieves or crooked realtors draw up sale paperwork.
• The paperwork is illegally notarized and filed with the Registry of Deeds.
• The property can now be transferred (sold) to an unknowing party or to the thief using their real name.

Can someone steal your house without you knowing? It's possible, particularly if the property is a vacation rental or a seldom-used home. The most efficient deed fraud is to flip ownership of the house and disappear before the crime is discovered because the individuals involved are hard to find if they've consistently used fake identification. 

Family members are frequently the perpetrators of this fraud – especially those needing money to feed addictions – because they know a parent or grandparent would rather walk away from property ownership than see a troubled child in prison for the felonies committed in deed fraud. Typically, rather than selling a home outright, family members often drain a property's value by taking out home equity loans without the owner knowing (and often with some delusion of repaying the loan). This transaction may involve an illegal property transfer by forgery, or the family member may have power of attorney for an elderly owner.

When purchasing property, follow the traditional steps of the process to protect your new home title. If a seller tries to convince you to forgo mortgage insurance and circumvent the usual process of sharing verifiable personal information, it's a red flag. Those who push for cash sales may also be up to something, as mortgage companies require more steps to authenticate loans. These steps (and the documentation involved) are in place to ensure that property is legally obtained and transferred. Title insurance, commonly purchased to cover any imperfections in the deed, should protect the buyer from losing money in such scams.

Some believe that the hype about deed theft has been ginned up by companies selling title protection. By overstating the likelihood that they will be victims of real estate fraud, these companies seek to profit from scared homeowners.

How Can Forgery Lead to Unauthorized Property Transfers?

Forgery is a key component of deed fraud. Signatures are among the various items available on the dark web, which is a black market for stolen identities, including copies of signed checks and driver's licenses (these items are often stolen or copied by unscrupulous D.M.V. and bank employees in exchange for cash). However, forged signatures aren't often checked unless there are other red flags in the transaction.

Effective Measures to Protect Against Fraudulent Schemes

Protect your property rights as a buyer or seller by following the traditional pathway of finding a legitimate title company, a deed researcher with good references, and a known mortgage company. Ensure each does its due diligence. In addition, you may:

• Add a layer of protection against fraud by putting the property in a trust, so signatures of trustees are necessary to effect a sale.
• Lock down your credit by sealing your accounts (or placing alerts for any activity) with the credit reporting bureaus (Experian, TransUnion, and Equifax).
• Keep tabs on your credit reports to watch for signs of fraud; bad actors may test the waters with a loan application before trying to sell your property.
• Take action if you receive bills for credit cards that don't belong to you or if you stop getting regular bills from utility companies.
• Ask if your local property recording office (county register of deeds or similar) sends alerts for title activity, which may catch an illegal scheme to transfer the title before damage is done.

The Benefits of Conducting Property Record Checks

When a property is transferred to a new owner, the title is checked for defects like contractor's liens and second mortgages. These complicate title transfers as liens must be paid before a transfer is final. Those seeking to sell properties illegally look for clean ownership titles and no encumbrances.

Anyone can do their own property record checks online, looking for things like current activity (which can take a while to show up in records), previous sales, the seller's background and criminal records, and the rightful owner's name and address.

Conclusion

Property ownership requires consistent monitoring. Due to the nature of public records, hackers and frauds may find victims in those who have owned homes for decades and have paid off their mortgages. Or they may cross-reference names to find owners of multiple properties to identify unoccupied units ripe for fraudulent sales.

Seeking a title lock or monitoring service are ways to prevent fraud as a homeowner. Putting properties and other assets in an irrevocable trust is another way to protect your investment.

As a property buyer, ensure that due diligence is followed during the purchase process. A fraudulent sale can be untangled but creates havoc on both sides of the transaction.