02/11/2022
Recently, companies have formed a new type of service which offers deed monitoring services where they purport to regularly check the county records to identify any fraudulent activity involving the title to a homeowner's property.
The companies describe a very rare criminal act. Through an elaborate and carefully worded marketing campaign, these companies prey on the fear that someone is going to "steal" a homeowner's deed or title to their home.
These providers charge a monthly or annual service fee and simply notify the homeowner if anything pops up. This all occurs AFTER someone has recorded a forged deed. It does not prevent a scammer fraudulently transferring your title. Their service is not an insurance product and does not fix the fraudulent recording.
Although it is true that anyone can forge someone's name and record documents, such as a deed, it does not make the thief the rightful owner of that property. Here are a few items to consider when contemplating a subscription to this type of service:
First, there is no way to "lock" a title or deed.
Second, anyone can monitor the county records at any time by either visiting the county office in person or checking online. In most cases, monitoring the county records online is free of charge and some counties offer an automated option.
Third, this type of service is not a replacement for title insurance. A home title lock cannot replace title insurance. Their services do not help cover any financial burden of title issues or mortgage fraud.
Last, even if a forged deed is recorded in the county — the homeowner does still own their home. Even if the fraudster does take out a loan secured by the stolen property the homeowner is not the victim; the lender is, since the scammer never legally owned the property a lender has no legal claim and would be unable to foreclose when the fraudster fails to repay the loan.
Lenders protect themselves by requiring the borrower to purchase a lender's title policy as a part of the loan closing process. When a lender suffers a loss due to a forgery in the chain of title, they file a claim under their title insurance policy. This is why it is important to understand these title lock services are nothing like title insurance.
Title insurance is purchased once, at the time a buyer purchases the property, and it provides the insured or their heirs protection against fraud or forgery that occurred prior to the time the insured purchased the property. Title insurance companies protect the integrity of the county records in this country since they examine the chain of title for any potential discrepancies. It is the best way for homebuyers to protect their investment.
