Whether you own or rent a home, you have to worry about the possibility of someone breaking in and stealing valuable belongings. This is one reason you get either renter’s or homeowner’s insurance for theft protection. But did you know you could have your entire house stolen from you? Sure, no one is going to physically walk away with it—but they could become the legal owners of the home if they commit real estate title fraud. And though this type of scam is not super common, the FBI reported that title fraud is just one of the types of real estate fraud that has led to 9,600 people losing about $56 million in 2017. If you want to reduce your odds of becoming a victim of real estate title fraud, take a look at what it is and how to prevent it.
Simply put, real estate title fraud occurs when someone transfers the ownership of your property from you—the rightful owner—to himself or herself without your knowledge or consent. This means they put the deed—the piece of paper that proves you own the property—in their own name.
In order to do this, the criminal committing title theft forges your signature on the deed so it looks like you sold the property. He or she then signs the document as the grantee—or the new homeowner—and files the forged deed with the county recorder to make it look official. If no one catches on to the deed fraud, the criminal looks like the new property owner on county records. And that means you no longer have legal ownership of the property—until you find out and fix the home title fraud.
What Are the Dangers of Home Title Fraud?
When you’re no longer the owner of your house on paper, you lose certain important benefits—like being able to sell your home or use it as collateral for loans. This is because the person who committed real estate title fraud might try to sell the house or rent it out to other people. If he or she somehow succeeds at this and the supposed new owners or renters show up to move in, you now have to prove that the property is still yours.
While you’ll likely be able to prove your claim, you will have to show that fraud occurred, which means you’ll need to hire a lawyer and go to court. This can be time consuming and costly—and you shouldn’t have to spend your time and money proving your house belongs to you! The good news is that title insurance should pay for your legal fees if this ever occurs, so make sure you get an owner’s policy when you buy title insurance before closing on your house.
Even if the real estate title fraud scheme doesn’t make it very far—and you find out about it before the criminal tries to sell your home—you could still face consequences. After all, home title fraud is essentially identity theft. Someone is out there forging your signature and pretending you agreed to major legal decisions that you didn’t even know about. This means someone likely knows your personal information and could be planning on using your credit card or applying for loans using your property as collateral. If they don’t pay on the loans they take out against your property, you could end up in foreclosure.
Clearly, real estate title fraud is not something to take lightly or ignore. Even if you don’t lose your house, you could find yourself in debt or in trouble with creditors and even law enforcement, depending on what criminals do with your information. That’s why it’s important to know about how real estate title fraud happens and how to avoid it.
Imagine answering your door and being asked by a stranger why you’re living in their new house. This would be a pretty shocking—and awkward!—situation, right? Don’t let it get that far. Instead, you should learn some red flags that you may be a victim of real estate title fraud.
One is getting house-related mail in someone else’s name. It might be the property tax bill, the water bill, or other bills associated with your home. Regardless, those should all be in your name. If they’re not, someone might have committed title fraud on your house.
Similarly, if you get a notice that your utility bills, tax bill, etc. are unpaid, you might be a victim of real estate title fraud. This is because sometimes identity thieves change the address where the bills should be mailed so their fraud will go undetected for as long as possible. If your credit score has dropped due to supposedly unpaid bills, it could be because of title fraud, as well.
Finally, if you have one or more vacation homes that should be unoccupied, and you find evidence that someone has been there recently, it may be due to title fraud. So, if neighbors or security cameras pick up activity at any of your properties, it’s possible the titles to those homes were stolen from you and someone is planning on moving in.
Maybe you haven’t noticed any evidence of real estate title fraud, which is great. But that doesn’t mean you’re in the clear. Anyone can become a victim of home title fraud, especially people who own several properties. But you can protect yourself with some preventive measures.
First, keep a close eye on your property-related mail. Make sure all your bills have your name on them, not someone else’s. If you see someone else’s name on your utility bills or property tax bills—especially the same name on several bills—you should check with your county’s deed office to make sure the deed is still in your name. You can usually check on your deed online, or even sign up for title monitoring services that will alert you of any changes. And if you notice you haven’t gotten a water bill, electric bill, etc. lately, contact the utility companies to find out why. You want to make sure no one has changed the name or address of those bills.
You should also check your credit report regularly to make sure there are no new accounts on it and no past due bills bringing your score down. You can get free credit reports from Experian, Equifax, and TransUnion each year. You can also set up credit monitoring through the credit agencies or credit card companies. This way, you’ll know early on if you’re a victim of identity theft.
Finally, if you have vacation homes or investment properties that are supposed to be unoccupied, check on them regularly to make sure no one has moved in. These are usually big targets for title fraud since it can take months for the property owners to realize there’s a problem! If you live far away from any houses you own, consider asking a neighbor or paying a company to keep an eye on them so you can catch any signs of real estate title fraud.
Of course, one of the most important ways to protect yourself from home title fraud is to get owner’s title insurance when you buy your house. This way, even if you don’t notice the signs of fraud right away, your legal fees will be taken care of as you fight to get your title back. If you need help getting title insurance, LemonBrew Abstract can provide you with some guidance. Our team offers title and escrow services, title insurance, and more, so contact us today!