Could You Be a Target for Title Fraud?

For many families, real estate is more than a place to live. It is often one of their more valuable assets, and frequently spread across homes, properties and ownership entities. Unfortunately, that can make property owners targets of a form of real estate crime known as title fraud, sometimes referred to as deed fraud or "title piracy."

The FBI has warned real estate owners about a steady increase in title fraud and deed fraud schemes. Criminals often search public records for properties owned free and clear of a mortgage, which can be especially attractive targets because there is no lender with an ongoing financial interest in the property. Vacation homes, investment properties, vacant land, and other properties that are not regularly occupied may also face elevated risk.

Because ownership records are public, criminals can learn who owns a property with little effort. Using fake identification and convincing email addresses or phone numbers, they pose as the owner when working with real estate agents or title companies, record forged documents transferring ownership, and in some cases, fraudulently sell or borrow against the property without the owner's knowledge.

The financial and legal consequences can be significant. Victims may discover fraudulent loans attached to their property or learn of a sale only after it has closed, leaving them to prove ownership through lengthy legal proceedings. While safeguards exist within the real estate system, resolving title issues can be time-consuming, costly, and stressful, particularly when fraud goes undetected for an extended period.

Fortunately, property owners can take steps to reduce their risk. Here are three:

• Monitor your property records regularly in every county where you own property. Many counties and register of deeds offices offer free property-fraud alert programs that notify owners when documents are recorded in their name. Because alerts only cover documents recorded after enrollment and each county runs its own program, every property should be enrolled separately. Families holding real estate through LLCs or trusts should enroll those entity names as well. Owners should also treat unexpected changes to property tax or utility bills, or inquiries about a listing they did not authorize, as possible signs of fraudulent activity.
• Freeze your credit and protect your personal information. A credit freeze will not stop a forged deed from being recorded, but it can make it significantly harder for criminals to obtain loans against your property in your name. Freezes are free at all three credit bureaus (Equifax, Experian, and TransUnion) and can be lifted temporarily when needed. Strong passwords and multi-factor authentication can also help limit the information criminals rely on to carry out these schemes.
• Review your title insurance coverage. Standard owner's title policies are generally designed to cover problems that existed when the property was purchased, so it is worth confirming whether your coverage extends to forgery that occurs afterward. Properties that have been transferred into a trust or LLC should also be reviewed, as those transfers may affect how coverage applies.

For high-net-worth families, real estate is often a significant component of wealth, making vigilance an important part of a comprehensive wealth-protection strategy. A few proactive steps today may help prevent a costly and disruptive problem tomorrow.