It’s common to think of valuables like jewelry or cars as possessions we need to protect from theft. But what about real property, that is, your home or a house you own but don’t live in? Unfortunately, scammers know the weaknesses in public recording systems and take advantage of them to make money off of unsuspecting owners and buyers.
In Ohio and Kentucky, as in most states, the recording of land goes through a passive system, meaning that required documentation that is presented to county offices are filed and recorded without a process of verification. For example, to transfer real property, a person only needs to bring a signed and notarized deed to the county auditor. In Ohio, the Auditor will transfer the real estate on his records and give the OK for the deed to be recorded by the Recorder. The County Recorder checks for proper form and legal description. There is no job at either the Auditor’s or Recorder’s office to verify signatures or even check that the notary who acknowledged the signature is licensed. This leaves a vulnerable entry point for criminals to commit fraud.
Here’s an example of a scam that’s happened more than once in Hamilton County:
1. The criminal forms an LLC, most likely done online. Ohio does not require the identity of an LLC to be publicly identified, but Kentucky does.
2. The criminal finds a home, usually vacant or neglected, then prepares a deed transferring that property into the name of his new LLC.
3. He signs the deed (or has someone else sign it) and gets it notarized. A notary is required by law to verify the signer of a deed, but many do not, especially if the property in question is in the name of a corporation. A fraudster can even act as his own notary. Notary stamps can easily be ordered from office supply shops without verification of license.
4. The criminal offers the home for sale and finds a buyer who has cash up front. The scammer transfers the property to the buyer and runs off with the money, never to be heard from again. Now there is a new owner to the property and the original owner is without title or any compensation for a sale he wasn’t aware of.
In one such case in Cincinnati, an owner who was victim of illegal title transfer was able to institute “quiet title” to recover ownership. Quiet title is basically a law suit that clarifies legal ownership. He won a default judgement against the scammer. In another local case, the unsuspecting buyer was able to get his money back only because he had purchased owner’s title insurance, which covered the amount he lost to the scammer.
How To Protect Yourself
There are monitoring services to protect your home from title fraud that cost around $15-20/month. But you can also do it yourself for free by periodically checking your property record on your county’s register of deeds. Be ready to act quickly if you get any of these clues of title fraud:
∙ You stop receiving your water bill or property tax assessment or bill.
∙ Utility bills on a vacant property suddenly go up or you find people living there.
∙ You find out your tenants were instructed to send their rent payments elsewhere.
∙ You find yourself in default on a loan or notified of foreclosure proceedings.
Lessons to learn here are (1) know who you’re doing business with in a real estate transaction; (2) monitor your property record; and (3) understand the value of owner’s title insurance. Buyers often want to save money and avoid purchase because a title company has already checked the title before closing on a house. But title companies do not always find defective title when it exists. Owner’s title insurance covers many complicated issues if title comes into question after you’ve purchased a home.