A topic that has come up lately with clients is the question of “title monitoring” and whether it is worth it. In light of elaborate scams and how common identity theft is, the quick answer is that it is it always worth it to monitor your title, but know what you are paying for is a service you may not need to pay for if you are protecting yourself the best you can. No company can guarantee or prevent title fraud any more than anyone can guarantee that you will not be victim to theft in general.
What is title theft?
Also known as deed theft or title fraud, title theft is where someone illegally transfers ownership of a property to themselves or another party without the rightful owner’s knowledge or consent. This is often accomplished by identity theft of the owner and sometimes of a third-party, forging and falsifying a transfer of the property, then recording it in the Official Records of the County where the property is located. This makes it appear, by way of the forged or fake deed, that this new person is the owner of your home. The rightful defrauded owner only finds out about the transfer when either attempting to sell or refinance the house. If the home was not fraudulently transferred, the defrauder may exploit the property by simply impersonating the true owner by taking out a new mortgage or renting the property out.
Who is at risk?
Any homeowner is at risk, but those parties who are not as likely to find out a fraud is being committed, are targeted. These targeted people include owners of homes that are paid off, free and clear; vacant homes (vacation rentals or owners live overseas); and the elderly. If the home is vacant, there is no one home to receive and go through mail regarding any loans or transfers or other activities affecting the home. Also, there is no one there to know that the home was being shown to sell to a potential innocent third-party buyer. A defrauder may event rent the home out and collect the rent.
What to do if you are a victim of title theft?
Contact the police and file a report. While this may or may not result in finding the party who defrauded you, the report of identity theft needs to be made, and the report creates a record that the fraud occurred. This can be useful in court proceedings, whether criminal or for title correction.
If you live in a county that has a process to dispute or flag fraudulent documents, contact the county recorder in which your property is located. Clark County, Nevada currently does not have such a process in place, but check anyway in case they eventually implement a protocol.
Always contact an attorney to find out what course to take. A lis pendens may be filed on the property to cloud the title as you formulate a plan on how to quiet title yourself. This will also buy some time to decide on whether a quiet title is your only option. A quiet title action is litigation to show you never sold or transferred the property and that the documents used to do so, were forged or fraudulent.
Notify the company who issued you a title insurance policy when you purchased the property, and file a claim. Your policy may have coverage for legal fees, financial losses and title restoration.
If the property has a mortgage for which you did not apply, immediately notify that lender. If the property has been sold to a third-party buyer, then also notify that new buyer so that everyone is alerted to the fraud committed and can potentially work together in your attempt to restore title. In the case of a sale to a bonafide third-party purchaser, courts may rescind the sale and return ownership to you. However, this can get complicated since there is the issue of the money that was paid by the bonafide purchaser, which arguably is actionable against the defrauder and restitution becomes problematic if you cannot find the culpable party.
Finally, always report any identity theft. You can file a report at www.identitytheft.gov, and a report should be made to credit bureaus like Equifax, Experian, TransUnion, etc. Perhaps also consider freezing your credit.
How do I protect myself from Title Fraud?
Here are a few ways to protect yourself from title fraud:
- Your title insurance policy may well cover you for legal costs and potential losses from fraud or forged documents. Check to make sure your current policy is in place, that you are an insured, and that it does in fact, covers legal costs and potential losses from fraud or forged documents, plus enhanced coverage for post-purchase fraud. If not, you can certainly purchase such a policy from any title company.
- Check your property record(s) regularly. You can do this by doing a search of your property with the County Recorder’s office for the county in which the property is located.
- Guard your personal information. Do not share sensitive information like your birthday, social security number, address and driver’s license freely over the phone or by email.
- Monitor your credit directly though credit bureaus or subscribe to a service for monitoring. If you see a new mortgage or loan you did not authorize, act immediately!
Should I pay for title monitoring services?
There are plenty of title monitoring services out there. They essentially do exactly that — they monitor your title. Many County Recorders offer their own monitoring free of charge. You can sign up for Clark County’s Recording Notification Service (RNS) here: https://recorder2.clarkcountynv.gov/PublicRecordsNotificationWeb/Subscribe. Once you sign up for Clark County’s RNS, you will be notified if there is any activity recorded against your property from that day forward. Be sure to review or contact an attorney to determine whether there has been any activity prior to signing up so that you are current with the status of your property.
Title monitoring companies cannot prevent fraudulent recordings because there is no way to proactively stop recordings from happening against your property. They can only notify you once the activity has already occurred. It is still valuable to know if there is activity on your property because there are steps you can take to prevent further damage or fraud if you know of a fraud sooner than later.
Clients ask if title monitoring companies are like “LifeLock” for your credit. LifeLock™ is a known identity theft-monitoring company monitor’s your credit file, financial accounts and the dark web for suspicious activity, but most valuably, it locks your credit file with TransUnion so that credit checks cannot be conducted without your consent to unlock your credit file. This is different from freezing your credit which you can do directly with all three major credit bureaus (Equifax, Experian, and TransUnion). The answer is no. It is not the same. There is no way to lock or freeze recordings against your property. Be sure to read deeper regarding title monitoring companies’ services where they claim to be able to “prevent” fraud, and you will likely find that they admit it is not possible to stop, but that they can only “monitor.”
Should I worry?
Identity theft is far more common than title theft. You should always worry about that. Statistics show that approximately 1 in 5 people are victim to identity theft. Title theft, however, is relatively uncommon. While not currently widespread, the effect is significantly more complicated and difficult to understand and undo than identity theft. It causes great financial and emotional distress to its victims. For these reasons, the fear and impact of title theft has resulted in an uptick in inquiries about what to do to protect yourself. However, AI will tell you that it is less frequent than things like credit card fraud. So, do worry about doing everything you can to stay informed, protected and alert to the issue, but only subscribe to title monitoring services if it is the best and most available option for you.
Tina Yan specializes in real estate, business transactions, and trusts and estate planning and can be reached at 702.888.0000.
