The Myth of Title Theft What Providers of “Protection” Against It Aren’T Telling You

INSIGHTS LEGAL AFFAIRS

The myth of title theft What providers of “protection” against it aren’t telling you

itle theft” was a term unknown just a generation ago. Now WILLIAM J. MAFFUCCI Attorney advertisers bombard us “T Semanoff Ormsby Greenberg & Torchia, LLC daily with warnings about it. They say that thieves can “steal” our homes by (267) 620-1901 forging our names on deeds, then resell [email protected] the property or take out mortgage loans to drain its equity. They pocket Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC the proceeds and “stick” us with any mortgage payments. But can a thief really “steal” your lengthy, involving expert testimony as the provider will prepare and file in the house through forgery, and are you to the validity of the signatures, and land records document to alert further really obligated to pay off a thief’s prohibitively expensive. buyers or lenders that the instrument mortgage loan? Although the owner has no legal was forged. Smart Business spoke with William obligation to repay the forger’s loan, the Owners can check the land records Maffucci, a real-estate litigator with owner may ultimately feel constrained to on their own, but there’s value to the Semanoff Ormsby Greenberg & do so as a practical matter. Some owners convenience of having someone regularly Torchia, LLC, to find out. don’t learn of the forged mortgage check the land records for them. There’s until the lender moves to foreclose the also a value to having a ‘red flag’ affidavit Can someone acquire title to a real mortgage, or even after the foreclosure prepared and recorded as to any forged property simply by forging the owner’s process is complete and title has passed deed that is discovered — but only if name on a deed? again. Bringing legal action at that late the recording is accomplished before No. A forged deed conveys nothing. stage can be particularly expensive. the forger succeeds in finding another And, having acquired nothing, the forger victim to ‘buy’ or take a ’mortgage’ on has nothing to resell to a third party or Why do the advertisements for the property. to ‘mortgage’ to a lender. “protection” against so-called title theft Although title theft isn’t real, a forged say that a forger who subsequently Will a provider of “title theft” protection deed or mortgage can have a very real “mortgages” the property to a also pay for a lawyer to represent an — often devastating — impact on the lender can “stick the owner with the owner in seeking to clear title after a owner. Since the forger’s name will payments”? forgery? appear on the land records, the forger Either the advertisers don’t understand That’s the $64 — or even $64,000 — can sometimes deceive a third party into the law, or their statements are question. If the provider’s terms include “buying” the property or a lender to take intentionally ambiguous. The its payment of the legal fees necessary to a “mortgage” of the nonexistent title. advertisements speak of ‘putting a clear title of any forged instrument that The owner cannot simply ignore the shield’ around your title, ‘monitoring’ it discovers, the service could prove to be forgery unless the defrauded buyer or it, and issuing ‘alerts.’ If you inquire extremely valuable. But that’s a huge ‘if.’ lender accepts the owner’s account and further, here is what you are likely to I’m not aware of any providers of ‘title disclaims any interest in the property. learn: The provider will regularly check theft’ protection who do cover their That rarely happens. Usually owners the land records to see whether your customers’ legal fees in litigation to must file a lawsuit to clear title. Most name has appeared on any deed or other clear title. And if such providers do exist, owners need a lawyer to do that, and instruments. The provider will alert you their service would almost certainly cost few lawyers are willing to handle such of any such instruments it finds. If you much more than the dime-a-day rates matters for free. The litigation can be respond that an instrument was forged, advertised widely. ●