Military families may be more susceptible to a unique type of real estate fraud: title fraud, sometimes called deed fraud. What is title fraud, and why might military homeowners be at more risk? I’ll explain.
Title fraud can happen a couple of different ways, but all scenarios involve someone filing a transfer of title or a new deed to a property without the consent or knowledge of the actual homeowner.
As homeowners, military families may be at higher risk because they may live away from their properties, may rent to people sight unseen, and may not know their neighbors as well. They are at higher risk than the average person. As homebuyers, military families are at higher risk for similar reasons. They may be buying from afar, not know the neighborhood, and not have an opportunity to talk to the neighbors.
What Is Title Fraud?
The simplest version of title fraud involves an individual going to the courthouse and filing a deed for a property transfer that never happened. In some jurisdictions, there is no verification or cross-checking of records. For example, lawmakers in North Carolina are considering changing the law due to a well-publicized case in Raleigh. While these types of cases are inconvenient, they’re rarely disastrous for the homeowner.
However, a more complex case can have negative outcomes for both the real property owner and any potential buyer. In these intentionally fraudulent sales, an unrelated individual targets an empty property. They use public databases to look up information about a property, including the owners’ names and mailing addresses. They can often change the mailing address without verification. If necessary for their plan, they create fake identity documents such as passports or driver's licenses.
Then, they list the property for sale. This might be a legitimate listing through a real estate agent, a For Sale By Owner, or a fake listing altogether. Sometimes they use pictures from previous sales or rental listings. If the homeowner isn’t local and doesn’t have a local area network, neighbors may be completely unaware that the listing isn’t valid.
Photo from iStock.com/Feverpitched
Why Military Families Are at Greater Risk
As an example, we used to own a house that we hadn’t occupied in over 15 years. Our neighbor friends had moved away, and it wasn’t in a location where we visited. While we still had friends in the area, we never asked them to drive to our neighborhood and put eyes on our house. (We probably should have.) When we did sell it, no one nearby would know if that was a valid listing or not.
Depending on the situation, individuals perpetuating the fraud gain physical access to the house, either by obtaining a key or having the locks changed. With fake documents, it’s easy to get a locksmith to help them obtain access to “their” property.
These fraudulent sellers often target buyers who are not local. This eliminates or reduces physical visits to the property, decreasing interest by the neighbors. It also makes it harder for the prospective buyers to learn anything about the property or its actual owner.
When the sale goes to closing, there are a number of ways the purported owner can obscure themselves. They can do a remote closing, using electronic documents or having the documents sent by mail. They may even forge notarization on those documents. If they attend the closing in person, they’ll use fake identity documents to show their ownership.
Once the closing is complete, proceeds from the sale are sent to a bank account that has been set up using the false documentation. The money is quickly withdrawn or transferred to a location that obscures its path.
Photo from iStock.com/prapassong
In most cases, the actual owner will get the property back in their own name, eventually. But this comes with high costs and requires traveling to the property location to sort out the mess. As a buyer, however, the outcome might not always be so good. If you haven't purchased owners’ title insurance, you may lose whatever money you’ve put down on the purchase.
As you can see, there are a number of ways that military life makes us more vulnerable than the average homeowner or home seller.
In most cases of title fraud, the property is vacant. If it isn’t vacant, it is more likely to be occupied by a tenant than the homeowner. Military families may have a vacant house for a variety of reasons, including getting a new tenant or leaving a gap before they return to their old home. As long-distance landlords, we may lose contact with old neighbors. And we sure aren’t going to notice a For Sale sign if we’re living across the country or across the world!
Military families often buy homes without having the opportunity to physically visit. If we can visit, it's often a quick “how many houses can we see” weekend. There may not be time to chat with the neighbors and dig deep into background checks. Depending on the state, closings may be done entirely online or using mail services. This prevents us from meeting the sellers in person, which can be a last chance to notice that things don’t seem right.
Depending on the laws where your property is located, there may not be any foolproof way to prevent title fraud. But there are steps you can take to reduce the risk.
Photo from iStock.com/Jacob Wackerhausen
How Do I Protect Myself from Home Title Fraud as a Military Member?
If you’re buying a home:
1) Ask a LOT of questions.
Who owns the property now? Why are they selling? Is the property currently occupied by the owner? If not, why?
2) Research the properties you're considering buying.
This includes public records, real estate sales, rental records, local news, and social media. Join the local area Facebook group and ask questions. If you know anyone at your new command, ask them to drive by and ask around.
3) Research the seller.
Google search their name. See if any of your friends are friends with the owner. This includes real life and social media. Sometimes it’s shocking how small our military world can be! It’s likely you know someone who knows the owner, or at least knows someone who knows the owner.
4) Make every attempt to visit the property in person.
Meet the neighbors. Stop by the courthouse and check for records.
5) Buy title insurance.
This protects you against most problems related to the title of your property. Make sure your policy covers you for problems that occur after closing and includes coverage for fraud, forgery, and impersonation.
Photo from iStock.com/gorodenkoff
If you’re selling a home:
1) Set a Google alert for your property address and your neighborhood’s name.
2) Check real estate sales sites regularly.
This will also provide you with valuable market data for when you rent or sell.
3) Check with your city or county to see if there is a way to protect your account.
They may have a way to be notified if any activity happens on your account. If you live in a small enough town, the clerk may even remember you if something comes across their desk.
4) Don’t lose touch with those friends and neighbors.
Reach out to be sure they have your current phone number and email. Be friends on social media. Send a Christmas card. This is even more important if the home will be vacant for any length of time.
5) Visit your house in person.
If the home is currently rented, you may be able to deduct the cost of travel. Use this time to check in on your property and meet those neighbors! While you are there, go out to lunch with local friends and share your concerns. Ask them to drive by the house when they’re in that part of town.
6) Make sure you have the correct address on your property records.
Most locations have an online portal where you can look this up. If you’ve been sending mail to a friend or family member, ensure that they are opening mail coming from the city or county where your property is located.
Staying Vigilant Against Title Fraud
Title fraud is still relatively rare, but our military lifestyle may put us at a higher risk of being a victim. Thankfully, there are steps we can take to reduce our risk. Just being aware of how title fraud can work is the most important step.
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