Title Pirates: The Growing Threat of Property Title Theft
In the world of real estate, a new and increasingly sophisticated threat is emerging: title pirates. These scammers are exploiting vulnerabilities in the system to fraudulently claim ownership of properties and make illegal sales. With real estate transactions increasingly moving online, the opportunities for these types of scams are on the rise.
This article will delve into the methods used by title pirates, how common this type of fraud is, and the red flags to watch out for. Most importantly, we’ll explore how buyers and sellers can protect themselves from becoming victims.
The Unraveling of a Deal
Katie Hanner, a licensed realtor and broker-owner of Thrive Realty in Austin, Texas, recently encountered a title fraud attempt. It started like many real estate inquiries, with a seller expressing interest in selling vacant land via email. The listed price was slightly below market value, enough to attract attention without raising alarm bells.
“Nothing seemed wildly unusual,” Hanner recalls. Then, the seller was unwilling to meet in person or take a phone call. Hanner’s instincts kicked in, and when she drove to the property, everything unraveled. The land was adjacent to other lots owned by the same person. Hanner tracked down the actual owner, who had a home next door and knew nothing about the potential sale. Left unchecked, a buyer could have wired hundreds of thousands of dollars to a fake seller. This near-miss exposed the vulnerability of the system.
How Do Title Pirates Steal Titles?
Title pirates typically target vacant land, second homes, or rental properties where the owner isn’t actively present. However, as Wesley Kang, a Los Angeles real estate agent and founder of Realtor 1099Cafe, noted, these scammers are becoming more audacious, and they now target occupied homes as well.
Kang shared a scenario where a scammer, monitoring county records, filed a fake deed for a couple’s house during their divorce. “They’re getting scary sophisticated,” he says.
So, how do they do it? “These scammers grab your information off public records, fake some signatures, pay off a sketchy notary, and boom, they’ve ‘bought’ your house or land on paper,” Kang explains. Once the false deed is filed, it can appear legitimate to banks, title officers, buyers, and real estate agents.
How Common Is Title Fraud?
Title fraud is on the rise, and the numbers are alarming. According to the FBI, real estate-related crime complaints in 2023, more than 9,500 were for title fraud. These criminals work relentlessly, exploiting weaknesses, and they are using AI to create fake documents that are very difficult to detect. David Zawadzki, executive vice president of business development at Proper Title in Chicago, stresses the need for vigilant title insurers who stay ahead of these techniques.
Kevin Tacher, founder and CEO of Independence Title in Florida, has become an expert in catching title thieves. In a 2018 case, he spotted a title pirate who had forged a warranty deed. Tacher noticed a mortgage that had been paid off six years before it was recorded. The scammer refused to connect Tacher with the actual homeowner.
On months when Tacher’s team handles 50 to 75 closings, he prevents five to seven scams.
What Are the Red Flags of This Property-Selling Scam?
Jennifer Haskins, an attorney at McCarthy Law in East Greenwich, Rhode Island, offers several red flags that buyers and agents should look out for:
- Unwillingness to Meet in Person: If a seller refuses an in-person meeting or property tour, it is a significant sign of possible fraud.
- Unlicensed ‘Agents’: Verify the legitimacy of a real estate agent by researching their stated company and contacting the company directly.
- Unbelievably Low Sale Prices: Enticingly low prices or promises of favorable financing can be attempts to scam you.
- Lack of Property Details: Sellers should be able to provide basic information about the property. Inability to do so is a concern.
- Urgency to Close Quickly: A strong sense of urgency, especially when combined with refusal to allow usual due diligence, should raise suspicion.
Another red flag, according to Tacher, is when scammers insist on using their notary instead of using one that the title company trusts. Scammers will often make excuses about the notary’s unavailability.
How Are Title Pirates Stopped?
“We’ve got to slow down just enough to ask the questions scammers don’t want us to ask,” says Hanner. This involves:
- Insisting on phone calls and video verification.
- Verifying identities through multiple sources.
- Comparing signatures with county records.
- Cross-checking seller details.
- Working with trusted title companies.
“And if a seller pushes back—if they refuse to meet, refuse to verify, refuse to follow standard procedures—that’s not just a red flag; that’s a deal-breaker,” she says.
