There are various types of real estate scams. But, one of the most common is title fraud or deed theft. Here’s a look at how it works, its red flags, and ways to prevent it.
How Does Title Fraud Work?
Real estate title fraud was once considered rare but is now thought by some experts to be one of the fastest-growing and prevalent cyber crimes in the US. This happens when someone assumes the identity of a homeowner. They use their victim’s credentials to sell or get a mortgage on their property or other assets.
Once the title is in the criminal’s name, they’ll use the property as collateral to acquire as many loans as possible. This will leave the legitimate homeowner with a hefty bill. Usually, they only become informed about this when they receive a notice from their lender.
Red Flags Against Title Fraud
Scams can be hard to spot. So, homebuyers must have enough knowledge about how they work. Here are signs they’re dealing with fraud:
- Absentee owner – The real estate agent and the homebuyer must arrange a meeting in person. This proves that both parties are legitimately interested in making a legal transaction.
- Different signature – Before signing anything, buyers and sellers must inspect the documents. They need to check whether all signatures are the same.
- Pre-signed document – Witnessing all people in a transaction sign papers is useful for evidence. It assures that nothing is forged and the documents are valid and enforceable.
- Offshore deposit – When a large sum of cash is involved, it’s only reasonable to be cautious. Homebuyers must be vigilant about sellers who make them wire their money to an offshore account.
- Power of attorney (POA) – This written authorization is necessary for most transactions. But, it can also be used to change pertinent information. So, in situations where a POA plays a significant role, be careful and ask for legal help if possible.
How to Protect Your Property and Yourself Against This
Title fraud prevention is the best way homeowners can protect themselves and their property. Some actions they can take are reaching out to their service providers when they don’t receive bills, checking their credit report for suspicious activities, and purchasing any insurance for their residence.