Title theft - A growing threat to homeowners

Increasingly we hear ads for title fraud “insurance”. Such insurance is of questionable, or at best limited, value. Yet title fraud is on the rise, enabled by easy access to our title records the internet provides. Years ago, pre internet, I was a sort of “Hall of Records rat”, pouring through old deeds, climbing ladders to reach the books in which they were contained. Always searching, probing, trying to discover an edge.

No longer.

Today no need to visit this or that Hall of Records in person. Now it’s all on the internet. Result is that crooks do not have to travel in order to ply their trade. Here is a lift from Kiplinger:

The scheme works like this: Fraudsters pick out a house—often a second home, rental, vacation home or vacant house—to “steal.” Using personal information gleaned from the internet or elsewhere, they assume your identity or claim to represent you. Armed with forged signatures and fake IDs, they file paperwork with the county’s register of deeds to transfer ownership of your property to themselves or a third party. They then sell the home or borrow against it, stealing your equity. When they fail to make payments on a loan secured by your property, you could end up in foreclosure or be unable to sell, refinance or pass the home on to heirs.

Another viewpoint appears at first to cast doubt on the validity of concern, but in the end only confirms it. However an article from Smart Business does get to the nub of the issue:

Will a provider of “title theft” protection also pay for a lawyer to represent an owner in seeking to clear title after a forgery?

I guess it’s not a huge surprise. A title theft victim is in a strong position legally to recover their home without need to pay off a fraudulent mortgage. However, the legal costs to achieve that outcome are daunting.

I do not have title theft insurance, but I do check my title records fairly often . . . just in case. It’s not difficult to do and takes less than a minute. Here are the two references mentioned earlier:

Kiplinger - How to protect your home from deed theft

Smart Business - The myth of title theft


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How would they handle existing liens on the property (from current lender say)? You cannot just transfer a property that has liens on it without removing those liens first. Then, they not only need to forge docs with the county register but also with lenders at which point, risk becomes much smaller I’d imagine. Especially if you do not have loan numbers and details.

Personally, we have our two properties in a living trust - which is a pain when refinancing - but I wonder if that helps prevent title fraud. When refinancing we had to provide a certificate of trust to take house out of the trust, then refinance it before putting it back in the trust. All extra steps that I’d hope would make fraud harder.

I suppose the fraudsters could just choose homes having no existing mortgage.


That’d take a bit more time but you’re right, it’d be easy enough to check that at the county register of deeds.

I guess that’s a good argument for not paying off your home (especially in current rates environment where you may want to lock low rates for 30 years).

I would think having the property in a trust makes it less secure because the fraudster could just make a fake trust amendment document that has their real name on it.

One idea is equity stripping your property. I don’t know how it works but I’d like to learn more. It’s effectively creating a separate entity to place a Friendly lien on the property.

Perhaps I’d you declare bankruptcy, your friendly lien may be superior.

Also, harder for a fraudster to transfer title with a lien on it, I would imagine.


Thank you, TripleB, for posting.

That is an interesting gambit and is not something I’ve run across prior to reading your post.

I’m not sure it’d be any easier. I thought that if your name in the name of the trust itself, then grantor or trustee names cannot be amended (to change those, you’d have to make a new trust entirely and having it replace the old one). I’m not an expert in that subject though.

If you placed a friendly lien through say a SMLLC, it could be considered bogus if the friendly party did not receive anything in exchange for the lien. Maybe if placed much before a creditor threat, it could avoid being considered bogus too easily. Still for protecting asset from this type of title fraud, it’d could work as intended since that lien would need to be removed first before they could transfer title.

A lien doesn’t prevent a title from being transfered. It just gives the lien holder priority rights over whoever the title is subsequently transferred to. Which is why most people insist on a clean title before completing the transfer, to endure they have top priority to the property they just bought.

I experienced this once. I sold my house to a friend with a self prepared quitclaim deed (no lawyers involved). When he went to sell it a year later, the buyer’s title search found my old BofA HELOC had never been closed and the lien released. So my friend owned it and had proper title, but my old debt could’ve foreclosed on what was now his property. (It was a formality, I thought the account had been closed, but that’s where trust entered the transaction).

Besides, if someone is forging a title transfer, they can just as easily record a fake lien release too.

That’s the gist of it though. As soon as they’d try to sell or borrow against the property with the fraudulent title transfer, the lien would come up. New lender will not close any loan without the lien being released first.

At which point, yes they’d have to forge a lien release too. Just extra steps for them that may be caught faster. From the standpoint of keeping the activity under the radar for as long as possible, they’d probably go for lower lying fruits than those requiring more documents to be forged. Which is why they usually elect to go after vacant properties most of the times.

What other options would you have against this fraud otherwise? Having a LLC or Land Trust own your properties so that your identify is not known? How much more secure would these be to this type of fraud?

The process for transferring property is the same no matter who or what owns it; the deed transfer is merely recorded. A business/LLC ownership could trip up a future title search, if the company performing it digs as deep as to verify the appropriate signatures/owners, but I think that’s hit or miss. And regardless, the property’s already been “stolen” from you at that point anyways.

I’d think the best part of having a lien is that the lienholder can simply foreclose, without all the time and expense of unwinding the fraud.

But I’d say the best defense is to do your own title search periodically. Catch the first transfer, before it can be compounded by additional transfers or loans.

Sounds like another good rationale for having a mortgage with tax deductions, inflation protection, and lien protection rather than a paid off house.

Unless they fraudulently release the lien before trying to obtain money from lender or buyer. Then you’ll still have to prove that fraud, and that your friendly lien is still enforceable thus allowing you to foreclose.

That was Shinobi’s conclusion as well and I think there is no other way. Aside from checking regularly, some counties - like ours - have implemented some kind of alert system called FraudSleuth which is free. Basically, it allegedly checks daily whether your name has been involved in new property activity. I just signed up for it so I’m not sure how well it protects you from this deed theft scheme but at least that is what they claim. For us, it’s an option only available if you create an account with the county recorder of deeds.