Last month, Washington County, Utah, launched a program that tracks the daily paperwork in the recorder’s office and notifies residents if any documents relating to their property parcel were recorded. Based on Salt Lake County’s program, Washington County’s Property Watch program is free and allows residents to quickly respond to any potential fraud. County Commissioner Gil Almquist told St George News, “Washington County is a great community and, although title fraud has not been a large problem locally, we are proactive and solution-minded.”
Just a few weeks later, West Haven, Conn., Oneida County, Wis., and Gregg County, Texas, all announced their own free property title monitoring programs and Leavenworth County, Kan., was recognized for having the state’s highest number of new property fraud alert subscriptions in 2021. Few, if any, of these counties had experienced property title fraud themselves at the time of their programs’ announcements.
But that doesn’t mean it doesn’t exist.
Just two days after St George News announced Washington County’s Property Watch program, WSB-TV in Atlanta reported that resident Linda Willis was the victim of property title fraud and didn’t find out about it until a demolition crew came to tear her house down. Now, Willis may face a long legal battle to regain the property that she has owned for 30 years.
How Might It Happen
“It’s a lot easier for someone to record an instrument and not even have to physically be in the courthouse,” says Richard S. Alembik, a real estate attorney in Decatur, Ga.
The electronic filing (e-filing) of documents and remote online notarization allows documents to be transferred electronically and recorded automatically, but it also reduces the in-person assurances that buying property used to require.
Gordon Erby, the clerk of the Circuit Court in Lunenburg County, Va., told the Kenbridge Victoria Dispatch that e-filing invites fraud, which is why he and his staff use the old-fashioned way to protect the public’s documents.
“We go through the deeds three times before we file them. Yes, it is the old-fashioned way, but we feel it is part of our responsibility to protect the public as best we can,” Erby said.
But fraudulent paperwork can still slip through the cracks. Clerks are now more closely reviewing the title, the grantor and grantee to ensure that names and signatures match and are verified with a notary seal, Gregg County Clerk Michelle Gilley told KLTV. However, even “if everything looks legitimate the property can be sold while occupants are still in it,” she said.
This type of cyber crime has grown significantly along with automation. The FBI’s Internet Crime Complaint Center (IC3) received a record 791,790 complaints from the American public in 2020, amounting to more than $4.1 billion in losses, an increase of 69 percent from 2019. Similar trends can be seen within the real estate and rental markets, which experienced a 279 percent increase in lost funds from 2017 to 2020.
While the number of real estate and rental cyber crimes have been relatively stable over the last 10 years, each instance has become more devastating, with the amount lost in real estate and rental fraud increasing dramatically. According to the IC3, there were 13,638 fraud victims in 2020, the second highest number of reports since 2012; however, across the eight years, the number of reports only fluctuated by 4,787. Conversely, the cost of these real estate and rental fraud occurrences increased by $197.78 million between 2012 and 2020, a 1,282 percent jump.
A well-regulated market could help reduce the instances of property title fraud, according to Alembik.
Measures that limit the e-filing of documents to certified personnel or require biometric data from involved parties could reduce this form of cyber crime. However, companies with political pull have been able to limit regulation, says Alembik.
Limited Protections
Homeowners can protect themselves by purchasing title fraud insurance, which is different from title insurance.
“Title insurance is something that you typically get every time you buy or sell a house,” says Rick Kahler, founder of the Kahler Financial Group in Rapid City, S.D. “When you buy a property, you want to make sure that the person selling it really owns it. And you want to be sure that there’s not all sorts of liens and encumbrances against the title that you get to inherit when you buy.”
Title fraud insurance protects against clouded titles. But, Kahler says, that doesn’t mean it’s always a good investment, because the title insurance company doesn’t guarantee they’ll do anything about the clouded title. “They will simply notify the policy holder about it and say, ‘You need to get that cleared up,’” he says.
A county-run Property Watch program, like the one in Washington County, can help residents for free. It’s a low-cost effort and could yield high rewards if fraudulent papers are ever filed.
Residents can also sign documents in an attorney’s office, call the register of deeds office to confirm nothing has changed or even retitle the property using a full name to reduce commonalities all for little to no cost.
Fulton County, Ga., has had a property fraud alert service for several years. Registering for the program “could save hours of time, legal fees and provide peace of mind,” Clerk and Recorder Patrick O’Brian told the Canton Daily Ledger.
