Real estate is a major investment that requires years of savings and effort. Needless to say, it’s also one of the prime areas prone to fraud and illegal activities.
A report shows that nearly 1 in 20 consumers were victims of real estate fraud in 2023, and the median amount they lost was almost $70,000.
If you’re not careful, you might also fall victim to similar scams. Title fraud is one of the most common types of real estate fraud, so it’s important to understand more about it.
Let’s see why property owners need to know about title fraud and how they can protect themselves!
What is Title Fraud?
Before learning, how to protect yourself from title fraud, you should understand, the concept.
Title fraud includes activities, such as property title theft, home title fraud, and deed theft. It means that someone has stolen your property rights fraudulently.
Scammers transfer property ownership under their name without informing or asking for the consent of the current legal owner. This is generally done by forging the papers to transfer ownership or to borrow money by keeping the property as collateral.
Unfortunately, the easiest targets of real estate scammers are amateur homeowners and elderly individuals as they may not recognize the fraud until it’s too late.
How Does It Work?
After understanding the answer to “What is title fraud?”, you need to understand how scammers operate. This is typically done in five steps:
Access to Property Information
The scammer first begins by collecting important information about the property. This information is often publicly available and includes the owner’s property address and description.
Forgery
Next, the criminal forges papers for home title theft or title insurance fraud. The main documents targeted are title deeds, mortgage papers, and transfer documents. The criminal can also impersonate the property owner or use a stolen identity to appear legitimate.
Submission of Fraudulent Documents
The scammer then submits these forged documents to the relevant authorities, formally transferring the title to themselves.
Title Transfer
Once the fraudulent documents are accepted, the property’s title is transferred to an accomplice, who becomes its legal owner.
Exploitation
After the property is illegally transferred, the fraudster can sell it to an unsuspecting buyer, take out mortgages against it under home title theft, or even lease it out to collect rent illegally.
Signs of Title Fraud
Knowing what is title fraud or the process isn’t enough. You also need to be aware of the signs that point to a potential scam that might happen to you at any time.
If you notice even one of these signs, don’t hesitate to take immediate action to investigate further:
- Unfamiliar financial transactions on your property, including mortgage applications or sales listings that you’re not aware of
- Missing mail or bills related to your property
- Unexpected offers from people to buy your property
- Any legal notice from the government regarding a change of title or property ownership
- Unfamiliar notices from your mortgage lender stating that your mortgage has been paid off
Types of Title Fraud
Here are some of the most common types of property title fraud that you should be aware of:
Forged Deed Fraud
This is when the scammer signs a sale deed under your name without your consent or knowledge. It’s mainly done by criminals who know municipal officials who can help them alter public records.
Fake Title Fraud
Here, scammers assume your identity and then take out a mortgage or loan against your property. Also called fake title fraud, this is especially hard to detect and often goes unnoticed until you realise what has happened once the scammer stops repaying the debt.
Disputed Property Title
Scammers can also sell you a disputed property, which can either have unresolved payment issues or be listed as a collateral property with an NBFC or a bank.
Inconvenient Property Status
Many criminals charge money to convert a property from leasehold to freehold, which is a common scam in some regions.
How to Avoid Title Fraud?
Like any other kind of identity theft, it’s often difficult to challenge title fraud. However, taking these steps can help you minimize risk:
Don’t Leave Your Home Unattended for Extended Periods
An unoccupied home is often a prime target of property scammers. Even if you’re not at home for extended periods, make sure that the property looks occupied.
Make sure your yard is tidy, collect your mail, and install lights that can be automatically turned on and off.
Check Your Emails Consistently
One of the earliest signs that a scam is taking place is when your emails and letters don’t line up. It is important to stay updated with your current bills and lender statements.
Check if all your account information is accurate, and remember to keep an eye on your junk mail.
Get Title Protection or Locked Title Insurance
Reputed bodies like the Federal Trade Commission (FTC) give warning signs on which organisations protect titles legitimately and which don’t, so keep checking their rules and regulations.
What to do if You Have Been Scammed?
If, unfortunately, you have been scammed by a scammer, there’s still time to set things right. Here are some steps you must immediately follow:
- Reach out to your county recorder and send them all the relevant proof of the paperwork that shows your property title has been illegally taken over.
- Contact your banking partner and ask them to freeze all accounts associated with the property’s financial transactions.
- Ask a real estate attorney for legal advice on home litigation and fraud.
- Get help from your home insurance company to check if they cover forgery expenses.
Conclusion
Title fraud can have a devastating impact on a homeowner, so it’s always a clever move to have all the paperwork reviewed by experienced lawyers.
You should also immediately report any fraudulent activities to the home authorities to receive better protection.
However, if you don’t know where to start, contact us at Title Check, and we’ll help you through the process!
