When there is crime in society, there is no justice.
-Plato
In recent years, I seem to be fielding more and more client inquiries regarding scams. These are
not the typical email scams we can all identify by their outlandish promises of life-altering riches
from a long lost relative. The newest scams are not really scams at all, but often deceptive
“protection plans” offering to shelter your home from the supposed hordes of ne’er-do-wells intent
on stealing your home title. These protection plans play on our fears and emotions, but do they
actually provide protection? To better understand the supposed peace of mind these companies
offer, we should first explore the basic aspects of a real estate deed.
A deed is a contract between two parties, legitimizing the transfer of real estate ownership from
the grantor (the party transferring the ownership) to the grantee (the new owner of the property).
The deed documents someone’s ownership of a property, otherwise known as the “title” to the
property. It is common for the deed to list the consideration (assets being exchanged between the
grantor and grantee). During the execution of the deed, the grantor signs the deed and must do so
in the presence of a notary who confirms their legal identity with their notary seal and signature.
The deed of transfer is then recorded at the courthouse in the city or county where the property is
located. The recording of a property deed ensures future owners will know who previously owned
the property and identifies a current owner’s full title and ownership (sometimes referred to as the
chain of title). Recorded deeds are considered public record and are accessible by the general
public via online access or by physically searching courthouse archives (depending on the age of
the deed).
With a better understanding of the deed creation and recording process we can now further
examine the misleading nature of these protection programs. The majority of these programs
proclaim that by paying a nominal monthly fee, the company will monitor, protect and insure
against the illicit transfer or borrowing against your property. To be clear, the act of stealing your
home title involves fraud and/or identify theft. Often someone is impersonating you to execute a
new deed conveying your home to another party for financial renumeration or borrowing against
your home. There could also be coercion of a notary to falsely notarize the new deed of transfer
with the same fraudulent intent.
Thankfully, the occurrence of home title theft is not as frequent as the companies offering these
protection services would make it out to be. For one reason, most lending institutions subject
applicants to rigorous background checks, thus preventing the title theft before it can start. If a
lender failed to exercise proper background checks, the lending institution could be at fault for the
potential loss. The danger of home title theft is more likely to occur once you own your house
outright (no mortgage). Prior to paying off your mortgage, the lien holder (mortgage company)
holds a priority lien interest on the property and would likely take action if someone were to try
and transfer the property without paying off the lien. To a certain extent, having a mortgage on a
property does give some additional protection by involving another entity with an interest in your
property.
Unfortunately, there really isn’t a way to “lock” your home title like you would physically lock a
door to prevent the theft of the contents. The only action you can take is to monitor the current
status of your title. As previously indicated, recorded deeds are considered public record and are
easily accessible. The do-it-yourself approach involves searching deed records on your own with
as much frequency as gives you peace of mind. In reality, the protection plans offered by these
companies are only offering monitoring and notification, not prevention of the theft. Once the title
theft has occurred, you will still have to contact a real estate attorney and your title insurance
company to start correcting the fraudulent action.
As home title theft is often associated with identity theft, you should always monitor your credit.
You can enroll in one of the numerous credit monitoring programs (some are better than others)
but even these programs do not prevent theft, they just give you real-time notifications of the act.
Alternatively, under federal law you are also entitled to at least one annual credit report from each
of the 3 credit bureaus.
As criminals become more sophisticated with their tactics, we need to be more vigilant in
protecting our interests. While home title protection plans seem to exaggerate the dangers of title
theft to substantiate their service, it is a service none the less. If you have concerns that your title
will be stolen, and you are unlikely to monitor the property records on your own, maybe the
monitoring service is right for you. Like many things in life, your level of concern will dictate the
appropriate response to remediate that concern. If you have further questions on home title theft,
or other estate planning related concerns, please contact our office to set up a time to speak to one
of our attorneys.