Real estate fraud has various forms. One of them is title fraud. It is less common compared to other scams. However, it may result in severe consequences for property owners. This article will provide insight into the nature of title fraud.

What is Title Fraud?

Title fraud is a type of real estate scam. It involves the unauthorized transfer of property ownership. The ownership is illegally given to the fraudster without the owner’s consent. This type of scam is often observed in vacant properties since they are not the primary place of residence of the legitimate owner.

How Does Title Fraud Work?

Title fraud usually includes these five steps:

1. Access to property information: The fraudster collects information about the target property. This information is usually publicly available such as the property owner’s address, legal description, etc.
2. Forgery: The fraudster forges documents related to the property. They forge deeds, mortgage and transfer documents, etc. They may also use stolen identity information to pose as the real property owner.
3. Submission of forged documents: Fraudsters submit fraudulent documents to the relevant government authority that records property transactions.
4. Title transfer: When the fraudster’s forged documents are accepted, the title of the property is officially transferred to them. At least on the paper, it makes them the legal owner of the property.
5. Abuse: Once the fraudsters have the title, they can then sell the property to someone else, , lease it to earn rental income or take out a mortgage or loan against it.

What are the Types of Title Fraud?

Title fraudsters usually target specific types of property owners. For example; senior citizens, disabled homeowners, property owners who own a vacation home, and people who have already been victims of identity theft. After they identify their target, title fraud can take different forms such as:

• Fake deeds or titles: Fraudsters use fake titles or deeds to transfer property ownership to themselves. Then, they may sell the property to take out loans against it without the legitimate owner’s consent and knowledge.
• Identity theft: Fraudsters steal personal information to be seen as property owners. Then, they may transfer the property title, refinance the mortgage, or sell the property without the legitimate owner’s consent and knowledge.
• Home equity theft: Fraudsters trick the property owner into signing some documents which are papers of refinancing or selling the property in disguise. As a result, they take control of the home equity.

How to Prevent Title Fraud?

Title fraud prevention measures implemented by businesses include:

• Identity verification: You should verify the identity of borrowers by using identity and document verification tools or services.
• Ownership confirmation: You should confirm the property ownership by using cross-referencing records with government databases and tax records.
• Technology usage: You should use software solutions that can help detect red flags in property transactions such as automated fraud detection services.
• Regular monitoring: You should monitor property titles regularly against any title changes or transfers that fraudsters can make.