Is the Title/Deed to Your Home Safe from Identity Theft?

The past decade has seen a rapid expansion in the number and types of identity theft in the United States. Once your identity has been stolen, the identity thief can use your name to make purchases with your credit card(s), open accounts, and steal your tax refund, to name a few crimes.

Fraudsters even took advantage of the pandemic by falsely filing for unemployment benefits using others’ identities, including yours truly. A thief used my identity to file for unemployment with the state of Ohio. I was immediately notified that my Social Security number had been used to file for unemployment, so I followed the U.S. Department of Labor’s checklist of steps to take, reporting the theft to the U.S. Federal Trade Commission and the Department of Justice. I also notified the state of Ohio and reported the bank that opened the fraudulent account in my name to receive the unemployment benefits.

By completing all recommended steps within a couple of hours after being notified of the fraudulent unemployment claim, I felt confident that I had done my part to prevent an identity thief from receiving benefits using my information. But despite all those recommended efforts in a relatively short period, Ohio still processed the claim and sent funds to the fraudulent bank account.

I’m a born and raised Topekan who has never worked in, let alone been to, Ohio. I took every recommended step in safeguarding my identity from would-be thieves, practicing what I preach to clients every day. Unfortunately, despite all those efforts, like millions of other Americans, I was part of a scheme that paid billions in fraudulent pandemic-related unemployment claims in 2020 and 2021.

This got me thinking about what else a thief can do with a stolen identity. Of course, we easily recognize the problems with stolen Social Security numbers, tax returns, and credit cards. And any part of our identity leaving an electronic trail can be subject to a fraudulent scheme. However, what about something as simple as the title or deed to a home?

Surely that document, directly on file with local government officials, is safe from fraud. But, unfortunately, the answer is “Not necessarily.”

How Property Deed or Title Theft Happens

A deed is a written document declaring legal ownership of a property. This official document should describe the property and include the names of the parties involved (e.g., ownership transfer from a seller to a buyer of the property).

Deeds of properties are filed and held at the register of deeds office of the county where the property is located. For example, in Shawnee County, there are approximately 76,400 parcels of real property. Each property could have one or several deeds, and one deed could account for several properties.

It is certainly possible for your title to be fraudulently transferred without your knowledge. Here is how it works:

First, a fraudster creates a false deed providing the legal description of the property and listing the transfer of ownership from you as the seller and them, or someone else, as the buyer. They then forge your signature and have a notary sign and seal the document or forge a notary’s signature and seal. The fraudster then pays the fee to file the document with the county register of deeds office, which reviews the document’s wording and files the deed if no errors are found.

Done, but how successful is title theft?

While title theft is very rare, it does occasionally happen. For example, suppose you are closing on a property purchase and are mortgaging the property. In that case, the lending mortgage company will require the lender’s title insurance while the borrower (you) has the option of securing title insurance. This is an added layer of protection for the bank in addition to their internal checks and balances when reviewing and processing mortgage applications. Title insurance is a one-time fee added to the loan’s closing costs and is designed to eliminate the risk of any title defects/fraud before closing the loan.

The title insurance company reviews the validity of the title and past titles of the property throughout its existence. If there are no irregularities or title fraud, then the title insurance company has performed its end of the bargain and will no longer review the title to your property after closing. If defects or title fraud are found, the title company will report this, and the transaction will not occur.

How to Protect Yourself

Suppose the title insurance company fails to identify a title defect/fraud that existed at closing. In that case, the title company will pay damages for the loss as stated explicitly in the policy. However, what happens if the fraud occurs after closing the property or if the house is already paid off? There is protection available for homeowners after closing with a product known as a home title lock.

Upon closing your mortgage or if your home is already paid off, you no longer have title insurance, thus the entrance of companies that offer a home title lock. The company will monitor your deed and provide alerts of any changes for $19.95/month.

A home title lock can provide ease of mind and convenience, but it does not prevent or insure against title theft; instead, it simply identifies when a change has been made, like a simple credit report. You will have to weigh the cost of 19.95/mo. for this service against the work and inconvenience involved in regularly checking your property records at the county’s register of deeds office. Fortunately, there is already an automated system for Shawnee County residents provided free of charge.

Shawnee County (SNCO) Register of Deeds Director Becky Nioce recently informed me that SNCO offers a FREE service in the Property Fraud Alert system, which notifies individuals when there is an activity involving their property with the Register of Deeds office. It provides notice of possible fraudulent activity, including fraudulent liens or mortgages.

“This service is easy to sign up for and offers a little extra peace of mind with just a few clicks of the computer mouse,” Director Nioce said. “Participants can choose whether to receive their alerts via e-mail or over the phone. I encourage all property owners to visit the Shawnee County Register of Deeds website at www.snco.us/rd or www.propertyfraudalert.com and add this extra layer of identity protection.”

This is your cue to sign up for this service for your properties in SNCO. Check with your county’s register of deeds office for a similar service for properties outside SNCO.

To prevent title theft, I recommend you diligently check the deed(s) to your property(ies) in the respective county register of deeds office. If you own property in SNCO, then please sign up for the Property Fraud Alert free service offering. If you don’t have properties in SNCO, I suggest checking with your county’s register of deeds office to see if they have a similar service offering.

If you do not live on any of your properties, I recommend checking up on those properties regularly to make sure no trespassers are living in a structure on the property. If you cannot do this, please have a friend or family member do it for you.

Open and review all mailings received from mortgage and title companies regardless of whether you recognize the company, but do not sign anything you are unsure of. Instead, have a trusted second source take a look.

Finally, open and review any mailings received under your address but directed to someone else’s name. For our clients, don’t hesitate to contact Clayton Wealth Partners if you suspect any fraud or have questions about potential fraud on your identity or property.

Eric Purcell, CFP®

As a Wealth Advisor, Eric loves helping people from all walks of life in meeting their objectives and accessing financial benefits they might not have known existed.