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YOU MIGHT RECALL my article warning about home title theft, where scammers try to claim ownership of your home. Since I wrote the article, the Federal Trade Commission has warned that one preventive measure, so-called title lock insurance, is bogus: It only alerts you to title fraud after the fraud has happened.
Thanks to a recent AARP article, there’s now greater awareness about home title fraud and ways to protect yourself. What can you do to prevent title fraud? Check with your county to see if it’ll provide notifications about your property, ensure you haven’t missed a bill or assessment, and set a Google alert for your address. If someone lists your property, you can stop it. If you have rental property or own vacant land, check periodically to see if someone has posted a “for sale” sign.
If you’re about to purchase a house or property:
Despite all these concerns, there is good news. Title fraud is increasing, but not so much for owner-occupied homes. Moreover, if you bought your home after 1998, most title insurance provides coverage for fraud and forgery that’s discovered after purchase. If you purchased before 1998, inquire about adding coverage.
If you’re under a mortgage, you likely had to buy a title policy for the lender which indirectly protects you. I went to the courthouse every 6 months to do title searches on my property under mortgage. I paid off my mortgage in August and met with my real estate attorney to inquire about title insurance for home owners who own their homes outright. There are two policies available. A standard policy covers other issues but does not address title theft or forgeries. The second type available is called an enhanced homeowner title insurance that covers title and deed theft and forgeries along with many other property issues. In this digital era, it is easier to steal a property especially in my state which fortunately now has a law going into effect in January requiring the presentation of identification documents proving ownership before a title or deed can be amended. I bought the enhanced policy. It cost just over $1600 and provides up to $320K of coverage but there is no monitoring by the insurance company. I’m considering buying a subscription for title monitoring like Home Title Lock for them to advise me of any changes. If there was a change, I notify my attorney and he files a claim and the insurance company pursues the matter in court. I was planning on putting the home into a living trust but my attorney told me that our state recently passed a law where you can set up a transfer deed to a named beneficiary when you pass away. I named my daughter. That transfer deed now overlays the property deed. When I pass, she’ll hire my attorney for probate and file an affidavit to the Clerk of Court and receive the property. The best part is that my enhanced title insurance passes through the transfer deed and protects her ownership of the property.
We recently had a case here in Raleigh, NC where a deed was claimed by someone other than the homeowner-on a very expensive home-due to state laws and a disconnect with deed registration processes. It is costing the homeowner several thousand dollars in legal fees. A real eye-opener! Property fraud investigation: Complete stranger obtains deed to $4M Raleigh home without homeowner’s knowledge – ABC11 Raleigh-Durham
Thanks for the article, you made several good points. However, one I disagree with though is be skeptical of for-sale-by-owner listings. These are potentially a great way for both parties to get a really good deal since either no money or less money goes to agents/agencies. I bought my first condo without an agent on either side of the transaction. After seeing the place for the second time, while standing in the kitchen of the condo, we made a deal in under 5 minutes. Once we agreed on price, I went to a competent real estate attorney to write up the offer. He made sure everything was legit. A good lawyer + title insurance is all that is needed. Since then I sold that condo, and my husband’s condo FSBO. For these I used a flat rate listing agent ($450) + paid 2.5 % to the buyer’s agent. This is the standard rate for the agent – and much better than the 6% I would have paid if I used an agent on both sides of the transaction. Again, a good attorney and title insurance are standard and necessary. Right now, I am in the midst of selling my late father-in-law’s condo with a flat rate listing agent. So far, all the executed transactions have been very straight forward and easy.
Thanks Sonja for this important information. I’ll check out the AARP article. I’m guessing not many of us check out Title insurance, or even know where the policy is. this is a good reminder to make sure all
our insurance information is with our estate documents.
I did not buy/fund a owner’s title insurance policy when we bought our current home over twenty years ago. The lender was protected by title insurance but we, as owners, are not. I revisited our original purchase closing statement and it indicates only coverage to the lender. The original mortgage is fully paid so the lender’s title insurance is now meaningless as I understand the rules.
If we ever consider buying another home I think I would likely decide to buy owner title insurance at that time. A background article on title insurance can be found as follows –
https://www.investopedia.com/terms/t/title_insurance.asp
I wonder what the warranty of title that is included in my warranty deed from the sellers who died years ago and the title opinion from the attorney, also dead, who did the original title search is now worth. I would guess not much.