How to Protect Yourself from the Rise of Real Estate Fraud Part 1
Graceland, Memphis Tennessee
In late spring, I found myself saddened by the CBS News headline, “Graceland is Headed for Foreclosure.” Naussany Investments and Private Lending claimed that Elvis Presley’s daughter, Lisa Marie, used Graceland as collateral to secure a $3.8 million loan from the company. She failed to pay it off before she died in July of 2023. According to the foreclosure notice, the estate was scheduled to be auctioned off at the Shelby County Courthouse in Memphis, Tennessee. Only a few days before the auction, a judge halted the sale following an appeal by Riley Keough, Elvis’s granddaughter and owner of Graceland.
What happened? Within a week, scammers based in Nigeria emailed The New York Times claiming responsibility for the attempted theft. In August, Lisa Jeanine Findley, a Missouri resident, was charged in connection with the case.
On September 26, ABC News reported, “FBI warns scammers are impersonating landowners to sell properties to unsuspecting buyers.” Title fraud, sometimes called deed theft is up 500% in the U.S.
Scammers Scheming
As reported by ABC News, real estate agent Lisa Shaw received a typical phone call in the summer of 2023. The caller claimed to own a piece of land in nearby Randolph, New Jersey. After 25 years, with his wife in declining health, he decided it was time to sell. Shaw did not realize the caller was part of an international crime web involving fake documents ranging from Canada to Vietnam. As she always does, she asked for documentation.
The perpetrator claimed to be a Canadian citizen living in England. He provided a British address and copies of what appeared to be a valid driver’s license from Ontario, Canada. The true owners lived in Texas and had no idea what was about to transpire.
As Shaw prepared the listing, she stated no one involved detected any spurious activity, not the attorneys, not my company, not the title company. After accepting multiple offers, Shaw called the supposed property owner. He instructed her to accept the highest one.
Sale documents were soon prepared. The deed had been notarized at the U.S. embassy in Vietnam. In December, the deal closed. The alleged owner directed the payment to be wired to two different banks. Only when the title company encountered trouble with the second wire did suspicions arise.
At that point, it was too late. As Shaw explained, “We knew it was definitely identity fraud.” The buyer who paid half of the sales price is now listed in the county tax records as the property’s new owner. The anonymous fraudulent seller is long gone. The now former owners in Texas are going to court.
How Does Title Fraud or Deed Theft Occur?
The scheme varies case by case, but will involve the following:
A fraudster will forge documents like driver’s licenses, and proof of address to initiate the sale of a property. Later, a forged General Warranty Deed is submitted to the title company.
A scammer will file forged deeds for land or property with the county clerk. In one example, a Florida resident arrived at the county courthouse to pay her property taxes. A stranger already paid them. With the receipt in hand, the swindler forged her signature, created a fake deed, and sold the property.
The scammer will then use the fake ownership document to:
Illegally sell the home
Take out a home equity line of credit
Rent the property to an unsuspecting tenant
Or refinance the mortgage
According to Lauren Albrecht, President of Florida Title and Trust, “Ninety-nine percent of the time, the money is gone before anyone realizes it.”
And what about the original owner who is often unaware of the crime committed against them? “It is up to the rightful owner to prove ownership in court, which can be expensive and drawn out. Additionally, if the home was unlawfully sold, it creates an additional mess for the new ‘owner,’ who may have moved in, remodeled, or otherwise altered the property.”
How Can a Homeowner Protect Themselves?
#1: Register your property with the county. This last week I visited the Records Division of the County Clerk’s office for Williamson County, Texas. It is where I own two properties. After communicating the reason for my visit, the informative clerk provided a document entitled, “Property Fraud Alert.” It is “an online subscription service offered to the public that allows them to have their name monitored within the Recorder’s Office to track possible fraudulent recordings that affect their property.” To sign up go to www.Wilcotx.gov.
On the main page, hover over GOVERNMENT at the top of the page and click on COUNTY CLERK.
On the county clerk page, click FRAUD ALERT SYSTEM SIGN UP on the left of the screen.
Click the link titled Sign up for Service to sign up for FRAUD ALERT.
On the pop-up window, click on Proceed to Site, and follow the directions to the FRAUD ALERT page
#2: Consider title insurance. The New York City Department of Finance recommends purchasing a Homeowner’s Policy of Title Insurance which can protect against financial losses. While traditional title insurance policies protect against fraud prior to the purchase of a property, the Homeowner’s Policy adds protection for home title theft after you own the property.
#3: If you own property in other parts of the United States, have someone keep an eye on it. Have them alert you if they see any suspicious activity.
#4: Make it clear who inherits your property when you pass away.
#5: While it may seem complex, some owners who own their property free and clear will record a mortgage against their property. Though they owe no money, the property cannot be sold unless the mortgage is satisfied.
In next week’s blog, I will address the risk involved in wire fraud and the growing use of AI by scammers and crooks in sophisticated schemes designed to dupe the most scrupulous safeguards.