Can someone really steal your house?

Steal your house? It’s easier than you might think.

When someone steals your wallet, a package delivered to your home, or even your car, you’d figure it out rather quickly. But if someone were to attempt to steal your house, you might not realize it until you find yourself in the middle of a legal mess.

It may sound farfetched, but it’s not very difficult to pull off. All it takes is for someone to falsify a new deed to convey the legal ownership of your property to someone else.

It’s happening more and more and not just to vacant homes in the inner city, because real estate transactions can now be conducted virtually. If you asked me thirty years ago if I thought someone would ever purchase a house without physically going to see it, I would have said no way. But with today’s technology, it’s not uncommon for real estate transactions to occur entirely online, especially for investors or out of town buyers.

So how does the scam work? A fraudster connects with an unsuspecting buyer online, sells them a house, prepares a fraudulent deed, and files it at the local county recorder’s office. And just like that, the headaches begin.

I’m sure you’ve seen or heard the commercials for companies that offer homeowners a service that will send an alert when there is a change in title to their property. Most of these companies charge a couple hundred dollars a year for a title monitoring service which offers zero coverage beyond the notification. If it turns out that the title transfer was fraudulent, they offer access to their preferred legal team which you can retain for an additional fee.

The fix for a fraudulent title transfer, which is called a quiet title action, can cost tens of thousands of dollars in litigation alone. At the current time, there’s no easy or cheap solution for cleaning up the mess, but there are other options for protecting yourself that are more comprehensive and a fraction of the cost.

Free Title Monitoring

Pennsylvania has 28 counties that offer a free title monitoring service. You can register multiple properties, and it will alert you as soon as any changes to the title are filed with the county recorder’s office. We’ve included a link so that you can see if your county is on the list and where to go to register. The Recorder of Deeds cannot reverse a fraudulent transaction, but the sooner you find out what occurred, the easier it may be to correct.

Coverage against fraud for as long as you own the property.

Like the paid monitoring services, your county’s free title monitoring service is just a notification system; it does not include any coverage for legal fees if there is a fraudulent title transfer. However, if you purchased the Enhanced Homeowner’s Title Insurance Policy when you originally purchased your home, you likely have coverage for legal fees, as the policy covers fraudulent transactions that take place post-closing.

It’s not very likely that you would fall prey to a fraudster’s attempt to transfer your title, but the FBI expects this type of fraud to increase as technology becomes more sophisticated.

Both the Standard and the Enhanced Title Insurance Policies offer comprehensive coverage against title defects created by the previous owners right up until the closing date. But coverage for the Enhanced policy extends beyond closing for as long as you own the home.

Insurance companies offer different levels of coverage to suit your personal tolerance for risk. If you’re worried about your chances of becoming a victim of title theft, then you may want to consider signing up for a title monitoring service. But if you’re willing to pay a few hundred dollars a year for a monitoring-only service, you should absolutely consider taking the Enhanced Title Insurance Policy on your next home purchase.

At this time, investment properties and commercial properties are not eligible for coverage under an enhanced title policy. The enhanced policy is only available for a home that will be your primary residence, one that you will occupy, and one that has no more than 4 family units. The enhanced policy adds 10% to the cost of the standard policy and includes, among other benefits, coverage for legal expenses in the event of post-closing fraud.