Real estate forgery may sound unusual, but the number of forged deeds has been on the rise. In March 2012, the California Department of Real Estate became so concerned about the problem that it issued a consumer alert to educate the public about the deed scams perpetrated against unsuspecting homeowners. If you're the victim of deed fraud, you'll need to take legal action to clear your title.
The Problem is Rife
Forged deeds are exactly what the name suggests: a fraudulent scheme that creates a property deed, forges the homeowner’s signature, and uses the forged document to claim that title to the property has been transferred. Fraudsters typically manage to have the deed notarized using false identification. Once the document is notarized, the scammer can record the deed and use it to take out a mortgage loan against the property. The perpetrator absconds with the proceeds long before the bank begins foreclosure proceedings against the unsuspecting homeowner.
The Problem is Yours
Although forgery is a felony in all fifty states, punishable by hefty fines and jail terms, you are ultimately responsible for safeguarding the ownership interests in your home. You will know that you are the victim of deed fraud if you receive documents in the mail for a mortgage loan or transaction that you know nothing about, or if the county recorder notifies you of the recording of a deed that you have not signed. If you suddenly stop receiving property tax bills, or you receive a notice of default when you are not delinquent on your mortgage payments, the chances are that someone else is claiming ownership of your home.
The Problem is Solvable
Report forgery to your local law enforcement officials. Then consult with a licensed real estate attorney. Bogus deeds can be voided by a legal action known as "quiet title," which clears away fraudulent and improperly recorded deeds. In some states, the action may be funded through the district attorney's office as part of the wider criminal prosecution of the fraudsters.
The Problem May Be Insured
Contact your title insurance company to determine if forged deeds are covered under your title insurance policy. Your policy is designed to protect you against losses arising from defects in your title that you could not possibly know about. Prior forgeries, such as a forged deed showing that a previous mortgage was released when it was not, is a type of hidden defect that insurance policies cover. Depending upon your policy, the insurance company may pay you money to compensate your losses, or it may cure the defect itself by filing a quiet title lawsuit.
- Phil Ashley/Lifesize/Getty Images