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What Is Title Theft?

WHAT IS TITLE THEFT? AND AM I AT RISK

Many of us have seen or heard the commercials about title theft and how we should “lock” our title. Since real estate is usually the biggest purchase in our lifetimes and usually consists of our home as well, this is scary and alarming to hear. But, how much risk do we have?
What is Title Theft:
Title theft is a form of identity theft. When you purchase real estate in Indiana, you are provided a Deed (there are other ways you could obtain title, i.e.: Affidavit, Court Order, but that is for another article.) The Deed is then recorded in the same county where the real estate is located. This recording is required to make your ownership valid against all others—it provides constructive notice to the world that you are the owner of the real estate. Because this information is available to the public (the Recorders’ records are public records,) anyone could obtain your ownership information. It is a bit of a double-edged sword- your Deed placed of record to ward of any unlawful claims, but said record could also be making you a target of thieves.
How does the theft work?
One fraud that is attempted is where a fraudster prepares a fraudulent deed showing that the owner (unbeknownst to the actual owner) transfers the property to someone else and then they record the Deed. Going forward, the “new owner” can do whatever they want with the property, take out a loan, sell to someone else, etc. The fraud may be more elaborate, for example, if you have a mortgage on your home, they would have to consider that and may even prepare a fraudulent release of that mortgage.

Another fraud scheme is where they actually take over your identify and use your deed to obtain a loan or sell the property. This would take more effort on the part of the fraudster because Lenders complete a lot of due diligence pertaining to borrowers before they approve a loan, but fraudsters have been known to go to this extreme providing fraudulent paystubs, tax returns, ID, etc.

What can you do to prevent this?
Unfortunately, there is no way in Indiana to guarantee someone wouldn’t prepare a false deed and record it-because recordings are not monitored. You can’t “freeze” recordings the way you can credit. There is no “locking” process. Any identify theft of your title will need to be attached defensively.

You can freeze any new credit. If you enroll in a credit freezing service, you would be notified if someone attempted to obtain a loan in your name. You would likely not be notified if someone changed the deed into another person’s name, but if someone is trying to sell your house or use it as collateral for a loan, it is likely you would be notified in some fashion at the property address.

You can also check your title by contacting us or any title company to do a routine deed check. This check is only as good as the day it is checked as new recordings happen daily, but it could give you some peace of mind.

As with all identity theft, always be on the look out for suspicious mail, texts, emails and phone calls. Many times it is something small that can tip you off that something is not quite right with your credit or financial records. Read your mail—property tax bills, bank notices, etc. as all can provide valuable information if someone is attempting to defraud you.

If you are involved in a real estate transaction, it is recommended that you use a reputable title insurance company to compete the transaction. It is along the lines of: you don’t know what you don’t know! Title professionals are experts at identifying potential fraud and can stop a transaction before the damage is done.

Does my Owner’s Title Insurance Policy help?

The title insurance policy you obtained when you purchased your real estate would not provide coverage for a future fraudulent act. It may provide coverage of a fraudulent act prior to your purchase which is only now becoming known to you.

There are other types of insurance policies that may offer protection for identify theft, but you would need to speak to your own insurance agent or company for those details.
I believe that the risk of your title being stolen is still relatively low. Most people who will pay money for real estate or issue loans will use a title company or conduct their own due diligence before closing. And since money is usually what the criminals are wanting this avenue does stop some transactions. Unfortunately, though, fraud is on the rise in general and keeping ahead of it is going to be an ongoing battle.

If you believe your title has been stolen, you should contact a real estate attorney in your area to provide you with legal advice for your circumstance.