Title Fraud: What Is It? How Can You Protect Yourself?
In this day and age, we all need to be vigilant of scams that try to take advantage of us. Even when it comes to huge transactions like the sale of a home or other property, some parties to these transactions will engage in fraud to advance their own interests. Yes, title fraud still happens, and it’s dangerous in that it can hamper your ability to buy or sell a home. To help you understand more about real estate title fraud, here’s a look at common title scams and how individuals engage in fraudulent title activity.
Real Estate Title Fraud Red Flags
Keep an eye out for these real estate title fraud red flags to ensure you don’t become a victim:- Different Signatures: Take a look at all the documents involved in a transaction. Do the signatures look uniform? If you see any variation of signatures, take a closer look — especially if any of the other red flags listed below are present.
- Powers of Attorney: Powers of attorney are necessary in many cases, but they can also be a source of fraud and manipulation. If you get in a situation where a power of attorney plays a significant role in a transaction, be extra careful.
- Absentee Owners: Similar to powers of attorney, absentee ownership can be a sign of fraud. It’s always good to meet or at least talk to the person you’re buying property from or selling property to.
- Free and Clear Titles: Many people have mortgages or other liens on their property. Without them, we’d have a hard time ever getting financing. If you do encounter someone who owns a home free and clear, it’s important to make sure they really do own the home outright before closing.
- Presigned Documents: It’s a good idea to watch as the documents are signed in your presence. If they come in with presigned documents, it can sometimes be an indication of potential fraud.
- Cash Transactions: Fraudulent title situations are designed to get the fraudster a huge amount of cash. If there’s a large sum of money going to one party in your transaction, this could be warning sign of fraud.
- Offshore Deposits: This is especially worrisome. If there’s a large amount of cash involved and that cash is being wired directly to an offshore account, do your due diligence before closing.