What happens if someone steals the deed to your house?
Real estate fraud is booming. According to the FBI’s 2023 Internet Crime Complaint Center (IC3) report, there were 9,521 real estate-based fraud complaints, more than were recorded for malware, data breaches, inheritance schemes, and ransomware last year. While this number may seem small, its impact is not. Monetarily, these crimes amounted to $145,243,348 in losses.
That number has caught the attention of homeowners, real estate agents, district attorneys, and governmental entities.
While real estate fraud can take many forms, from borrowers misleading lenders about their liabilities to fraudsters taking out HELOC loans on properties owned by the elderly, one type of fraud is particularly pernicious: deed theft.
Deed Fraud: A Growing Real Estate Scam
Deed theft can occur when someone takes the title, or deed, to another person’s home without the homeowner’s knowledge or approval.
This tactic is growing in popularity with scammers, and it disproportionately impacts vulnerable communities, such as the elderly and homeowners of color.
However, it also greatly impacts homeowners with second homes or rental properties that are not always monitored as closely as primary residences.
Part of what makes deed theft so lucrative is that it is difficult to detect and prosecute, which gives fraudulent owners the time to execute transactions on the property.
Add to this the acceleration of home price growth, historically high interest rates, and rising inflation since the pandemic, and the resulting environment has been one that has allowed deed and title theft to flourish.
Real Estate Fraud Notification
by CoreLogic
“There is always a steady flow of real estate fraud, but when there is an economic downturn and inflation is on the rise, we do see more criminal activity,” explains Ken McCormick, Deputy District Attorney, Alameda County, California. “When people feel desperate, they are willing to commit a crime. We are seeing this type of fraud occur especially by family members who are impatient to gain their inheritance. So, people are committing this fraud on their own family.”
Increasing Government Protections
Some state governments, however, are beginning to step in to provide recourse for homeowners and district attorneys’ offices, which until recently were severely limited in their ability to prosecute these crimes.
In New York state, deed theft was not formally classified as a crime until 2023, and consequently, there were few protections in place to prevent or halt a theft in progress. Last year, Governor Kathy Hochul signed legislation that expanded the list of crimes that prosecutors can leverage to invalidate these thefts.
California also provides protections for homeowners. California Code GOV § 27388 states that money placed in the Real Estate Fraud Prosecution Trust Fund shall be used “to fund programs to enhance the capacity of local police and prosecutors to deter, investigate, and prosecute real estate fraud crimes.”
Nevertheless, not every state has taken such proactive measures to combat this type of real estate fraud, which for many homeowners comes as a surprise, since advanced alerts for this type of crime are still limited. But this is changing.
“The main challenge in prosecuting real estate fraud is that often the fraud is only uncovered years or even decades later, perhaps after the homeowner has died. That’s why this REFN notification system is so helpful because it alerts the homeowner of the transaction and allows us to quickly investigate.”
Ken McCormick, Deputy District Attorney, Alameda County, California
Tools Available for Deed Fraud Protection
Fraud notification programs, such as the Real Estate Fraud Notification (REFN) solution by CoreLogic, are valuable to help identify real estate scams. Notifying homeowners of recordings on their properties — including grant deeds, home equity lines of credit (HELOCs), and foreclosure documents — can often be their only opportunity to learn about fraudulent activity on a property.
As the Deputy District Attorney of Alameda County, California, McCormick leads a Real Estate Fraud Unit investigating these crimes. He stated, “The main challenge in prosecuting real estate fraud is that often the fraud is only uncovered years or even decades later, perhaps after the homeowner has died. That’s why this REFN notification system is so helpful because it alerts the homeowner of the transaction and allows us to quickly investigate.”
Alerting the taxpaying homeowner is crucial to uncovering the fraud quickly. But why is this important?
“Crooks don’t pay taxes,” said DDA McCormick. “As elderly people leave their homes to move to an assisted living facility, their house may be empty until a squatter moves in who may fraudulently change the title. Or the owner may have multiple homes but pays the property taxes from a different location. If a deed transfer is fraudulent, the responsible taxpayer will ask the DA Office to initiate an investigation.”
Can Someone Really Steal the Title to Your Home?
Scammers steal deeds in many ways. The theft can involve complicated shell entities and wire fraud, or often, it can be done simply through forgery or by an offer to stave off foreclosure. And in the case of vacation homes that sit empty, squatters can move in.
$145.2M
Losses from real estate-based fraud in 2023
Quitclaim deeds, for example, are typically used to transfer property in non-sale situations, such as transfers of property between family members, and they release a person’s interest in a property without stating the nature of the person’s interest or rights, making them easy to manipulate. In most cases, fraud transactions involve signed, legally binding documents, which can make the case to prove that a fraud was not a legitimate business deal particularly difficult to prove.
“County recorders don’t contact homeowners or check signatures, they just record the documents,” explained DDA McCormick, “Recording a quitclaim deed with a forged signature is easy. It doesn’t take a rocket scientist. The return on the criminal investment is much higher for real estate fraud than other types of crime.”
Plus, even if deed theft is proven in court, the rightful homeowner is not simply guaranteed that their property will be returned to them. Many must go through civil court to regain property ownership, but even that is not guaranteed.
“The main difficulty in prosecuting these crimes is in providing evidence,” said DDA McCormick, “In these kinds of cases, the people who have the home equity may be older or have some cognitive decline. It can be harder to get the evidence out of the elderly who may be in a nursing home or hospice care, and over time, memories fade. Getting early notification of fraud allows us to quickly investigate and interview potential victims.”
Deed Fraud Protection Begins With Oversight
While deed fraud can feel like a looming threat, it doesn’t have to. When buying or selling your home, for example, a reputable realtor should provide details of upcoming transactions so that you can be sure you are communicating with legitimate individuals and institutions.
Keep an eye on your credit report and utility bills for unusual changes or charges. And you can check your county recorder’s office for your property deeds’ status, online, or in person. Most importantly, notify your district attorney and county recorder’s office about suspected fraudulent activity immediately.
Acting quickly can provide greater financial protection and give prosecutors more time to focus on investigating and prosecuting criminals.
Real Estate Fraud Notification
by CoreLogic
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