Deed Fraud: Another Reason to Choose Enhanced Title Insurance

It’s not enough that thieves want to break into your house, now they are finding ways to steal the house itself right out from under you.

Deed fraud, or property theft, is often hidden in plain sight, as can be seen in Sybil Patrick’s story:

The clues were there for months, but property investor Sybil Patrick didn’t put them together. The locks to a vacant Harlem brownstone she owns were changed. Belongings weren’t in the same place she left them.

Then one day last spring, Ms. Patrick, a 79-year-old former nurse, showed up to tend the front yard. The superintendent next door asked why she was visiting a house she had already sold.

But it turned out the superintendent was correct: The house had been sold, without her knowledge, about a year earlier for roughly $750,000.“

WSJ, Latest Cyberthreat: Stealing Your House.

Law enforcement agencies across the country are noting an increase in cases involving theft of properties using a variety of techniques.

In one, scammers dupe elderly homeowners and individuals drowning in debt, telling them that they’ll refinance their mortgage or pay it off for the home. But after signing murky paperwork, the desperate homeowners end up getting nothing or only a fraction of what they’re promised and lose the deed to their property.

Another variation involves fraudsters trolling online city records and surrogate courts looking for properties where the owner is an absentee landlord or is dead and appears to have no heirs.

Once they find a target, the scammers file a phony deed, often using an alias, with the Finance Department. The deed is then transferred to a third party, often a holding company or another fictitious person.”

DNAinfo, Family Says its $1.5 Million Brownstone Was Stolen in Deed-Theft Scam

Protecting the victims of deed fraud is proving quite difficult. Forged documents are all too easily registered unchecked into city records; the culprits long gone once the actual homeowner identifies a problem.

Protecting Yourself from Deed Fraud

Fortunately there is a way to reduce exposure for this type of crime. The purchase of an Enhanced Owner’s Title Insurance Policy offers additional title protection for the many risks homeowners can face post-closing, including forgery. Following is a sample chart comparing a basic policy from an enhanced policy, issued by First American Title Insurance Company.

When advising your clients, keep in mind that Title Insurance is a one-time charge. For a small increase in the title bill, considering a home is one of the largest purchases many consumers make in their lifetime, purchasing enhanced coverage is a small price to pay to protect one’s investment. If you would like more information on this article, please contact me directly, [email protected].