Can someone acquire title to a real property simply by forging the owner’s name on a deed?
No. A forged deed conveys nothing. And, having acquired nothing, the forger has nothing to resell to a third party or to ‘mortgage’ to a lender.
Although title theft isn’t real, a forged deed or mortgage can have a very real — often devastating — impact on the owner. Since the forger’s name will appear on the land records, the forger can sometimes deceive a third party into “buying” the property or a lender to take a “mortgage” of the nonexistent title.
The true owner cannot simply ignore the forgery unless the defrauded buyer or lender accepts the owner’s account and disclaims any interest in the property. That rarely happens. Usually owners must file a lawsuit to clear title. Most owners need a lawyer to do that, and few lawyers are willing to handle such matters for free. The litigation can be lengthy, involving expert testimony as to the validity of the signatures, and prohibitively expensive.
Although the true owner has no legal obligation to repay the forger’s loan, the true owner may ultimately feel constrained to do so as a practical matter. Some owners don’t learn of the forged mortgage until the lender moves to foreclose the mortgage, or even after the foreclosure process is complete and title has passed again. Bringing legal action at that late stage can be particularly expensive.
Why do the advertisements for “protection” against so-called title theft say that a forger who subsequently “mortgages” the property to a lender can “stick the owner with the payments”?
Either the advertisers don’t understand the law, or their statements are intentionally ambiguous. The advertisements speak of ‘putting a shield’ around your title, ‘monitoring’ it, and issuing ‘alerts.’ If you inquire further, here is what you are likely to learn: The provider may regularly check the land records to see whether your name has appeared on any deed or other instruments. The provider will alert you of any such instruments it finds. If you respond that an instrument was forged, the provider will prepare and file in the land records document to alert further buyers or lenders that the instrument was forged.
Owners can check the land records on their own, but there’s value to the convenience of having someone regularly check the land records for them. There is also a value to having a ‘red flag’ affidavit prepared and recorded as to any forged deed that is discovered — but only if the recording is accomplished before the forger succeeds in finding another victim to ‘buy’ or take a ’mortgage’ on the property.
Will a provider of “title theft” protection also pay for a lawyer to represent an owner in seeking to clear title after a forgery?
That is the question, isn’t it? If the provider’s terms include payment of the legal fees necessary to clear title of any forged instrument that it discovers, the service could prove to be extremely valuable. But that is a huge ‘IF.’ I’m not aware of any providers of ‘title theft’ protection who do cover their customers’ legal fees in litigation to clear title. And if such providers do exist, their service would almost certainly cost much more than the dime-a-day rates advertised widely. Remember, there are NO free lunches.
What role does my Home Insurance, Identity Fraud Coverage Play?
Title theft or mortgage fraud is Identity Fraud, and therefore a peril you can buy insurance to protect you from. Some packages include this feature as an automatic benefit.
The coverage has two levels at Farmers: $15,000 and $28,500 that can be added to the Home policy for $9.00 or $14.00/ year. These amounts can be used for a variety of expenses such as hiring an attorney, or court fees. In short, you can cover yourself against a threat that is not easily preventable but can be made more bearable if it occurs.