Protecting Your Property Against Fraud

Sadly, property fraud is on the rise every where. Property fraud is expected to continue to increase due to advancements in technology and the growing ingenuity of fraudsters. Property fraud, specifically, can involve unauthorized changes to property ownership records or fraudulent use of property information. While there are no national statistics tracking home title theft, the FBI’s 2023 Internet Crime Report tracked 9,521 complaints of cyber-related real estate and rental fraud last year. Losses totaled more than $145 million.

There are a number of measures you can take to protect and safeguard your own property from fraudulent activities, such as unauthorized transfers or encumbrances. These include:

1. Title Insurance

• Ensure you have a Homeowner’s Policy of Title Insurance, which can protect against defects in the title, including fraud. This is different from your traditional Title Insurance policy, which protects against fraud prior to the purchase of a property. The Homeowner’s Policy of Title Insurance adds protection for home title theft after you own the property. North Carolina does not require homeowners to have an owner’s policy, so don’t assume you have coverage.

2. Register for Fraud Alerts

• Many counties offer a property fraud alert system where you can register to receive notifications if any documents are recorded against your property. Check with your local county registrar of deeds or clerk’s office for this service where it’s available.

3. Monitor Property Records

• Regularly check the property records at your local register of deeds office to ensure no unauthorized documents have been filed.

4. Use a Trust or LLC

• Holding your property in a trust or a limited liability company (LLC) can add a layer of protection and make it harder for fraudsters to target your property.

5. Restrictive Deeds

• You can place restrictive deeds on your property to limit the ability to transfer or encumber the property without your explicit consent.

6. Professional Assistance

• Engage a real estate attorney to regularly monitor your property records and handle any legal matters that may arise.

7. Educate Yourself

• Stay informed about common property fraud schemes and the latest methods criminals use to perpetrate real estate fraud.

Taking these steps can significantly reduce your risk of falling victim to property/title fraud. If you suspect fraudulent activity on your property, take the following actions immediately as recommended by the North Carolina Real Estate Commission.

1. Contact police and file a police report on the fraud.  Also submit a complaint to the FBI on their website ic3.gov.
2. Contact an attorney to file a lis pendens against the property, to prevent it from being sold to a bona fide purchaser for value.
3. Continue to pay the taxes on the property, so that it will not be sold in a tax foreclosure auction as this would result in a sale to a new owner that could be legitimate.
4. Work with law enforcement and an attorney to locate and serve the fraudulent ‘new owner’ with legal action.  Pursue a declaratory action to declare the newly recorded deed void as a fraudulent transfer.  This would legally return the property to its rightful owner.