The Expert Podcast

So what is deed theft and can you actually steal a house? Well, here's what happens: in a lot of areas, there's a process where fraudsters and scammers can review real estate records, forge a deed transfer, and end up owning a property for free. In this case, there was a group of people who stole a bunch of homes worth a million dollars.

How does this work? Well, if you are a scammer, you can access property records through a public records research. All real estate records are considered public documents, since title records are public. You can see everything about that title, the owner, their address, if there are any mortgages, and if they have absentee ownership. This means that if the mailing address for their tax bill is different than their property address, that can be found in the land records.

How does that help you? Well, if you can find a property where the ownership owns it for cash and there's no mortgage, and the address on their tax bill is different than the property address, then you can assume it's an absentee owner—someone who lives somewhere else and has no mortgage.

What you do is create a property deed. Now, one thing that people don’t realize about property deeds is that they’re created from blank sheets of paper. They’re not like an official document or a certificate; it’s just a deed typed up on somebody's computer, signed by the owner, and filed with the county. Now, the property’s transfer is complete.

So what these scammers will do is look up the owner, Joe Schmoe, and create a deed transferring the property from Joe Schmoe to some fake company. They forge a signature for Joe Schmoe, and they have an idea of what the signature looks like because when the person bought the property, they signed a deed. So they can fake the signature, get two witnesses who are just made-up people, and file that deed.

One thing about property deeds is that the county recorder or clerk cannot verify signatures. They’re not the police, not the court, and not a forensics analyst. They’re just a clerk, and if a deed is presented and it looks like it makes sense, they file it. Now, the deed is filed, and it shows that the property was transferred from Joe Schmoe to XYZ Investments. The scammers will then put that property for sale, listing it on Zillow, Redfin, or even getting a mortgage on it, since now it’s free and clear. They take the cash or the lien, sell it, and run away with the money.

Now, the real property owner starts getting notices saying their property was sold, there’s a lien on it, or that they owe payments, and they have no idea about it. So they run a title search and find out that there was a deed theft on their property.

Many times, this can be undone, but sometimes it can’t. What if it was sold to an innocent third party who just paid good money for it, not knowing it was a scam? Those are the kinds of scenarios that result from deed fraud.

This can be a real problem if you’re the property owner and you discover your property has been sold or has a mortgage on it. You have to go through a lot of steps to undo it, which may require getting the courts involved, hiring a lawyer, and spending a lot of money. Meanwhile, the people who took the money are long gone. They usually use fake IDs and fake account numbers to withdraw the money, and you’re probably not going to find them.

So, how can you prevent this? One thing you can do is file a notice of intent on your deed. You can check with an attorney or look into the legalities of your county. You can file a notice of freeze on your deed so that if anyone sees it, they know they need a release before transferring the property. But this is not uncommon—usually, it happens with houses that have no mortgages and have absentee owners.

If you're an investor or a purchaser of property, make sure that you perform due diligence on the seller. Ensure that you have proper IDs and don’t just rely on copies. Also, make sure you have an escrow company that knows what they’re doing. This particular alleged scheme used disbarred attorneys who were getting fake Social Security numbers and fake driver’s licenses.

Deed fraud is still out there. It’s still running, and it’s something you want to be aware of so that you don’t get caught up in losing money to a scam.