How to protect your real estate investments from fraud

Is it possible that someone could steal your house? Or more accurately, could they steal the title to your home? It’s hard to miss the commercials that offer home title monitoring and protection. If you have seen something similar on television, or have read stories on the internet, you may be concerned. It is one of your highest value assets after your retirement portfolio. 

Homes and land are unique assets and they come with their own titles. Your county clerk maintains these records at the county courthouse or records office. They are also available to the public. For example, in Little Rock, Arkansas, you would simply go to the Pulaski County records to look up the owner of a property. 

So how could this theft happen?

To transfer the title of your home without your knowledge, it would require forgery of your signature and a set of falsified legal documents that look convincing to the county clerk’s office. It would need to pass through their checklists, established internal controls, and other guidelines. Forgery on this level would be a felony, a serious crime would have to be committed. 

The good news is that for most property owners that occupy their home, this would be tough to pull off. Imagine, if you can, a scenario where someone is able to circumvent the safeguards and forge your name to the required documents. What happens then? Do they walk into your house while you are out running errands and change the locks? Do they go to your neighbors’ house and introduce themselves as your new neighbor? When the police show up, do they produce a fake buy-sell agreement and convince the authorities that they really are the new owner of the house? 

The reason you do not hear about this for a typical homeowner is that is just is not plausible unless there are significant lapses within the county clerk’s office. There are isolated instances in major cities where this type of title theft has happened, but it is still rare. There are too many holes in this scheme, and it would be difficult for the fraudster to avoid capture.

Protecting your investment 

There are scenarios that are a bit more tricky. For example, what if you own a piece of land or property in another state? What if you never visit that property, and never pay any attention to it? Now this is a scenario where it may be easy for someone to come in and use identity theft to fraudulently transfer the title of your property. 

In this scenario, you would want to take steps to monitor the property yourself long distance. The easiest step is to monitor your title status through the county clerks or assessor’s office. In some areas of the country, counties have started a free text notification service. If it is available in the area in which you own property, it will alert you if there is a change in the status of your property. You would also want to monitor the mail and be on the lookout for any clues that something has changed.

Unfortunately, when it comes to fraud, we have observed that the criminals are experts at exploiting weak systems or vulnerable situations. Senior citizens are easy targets, but there are others susceptible to exploitation as well. While paying a company $20 per month to monitor a property title may be tempting, it will rarely be necessary for most situations.

As always, we are available to help you navigate your most difficult financial questions. If you have any concerns about a property situation, we can help you evaluate your options. 

Kristina Bolhouse, CPA/PFS, CFP®

Vice President/Shareholder

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