Home title theft: What is it and how to protect yourself

You may have heard about home title theft — perhaps you’ve conjured up an image of someone stealing a special piece of paper from your filing cabinet in the middle of the night. Home title theft is a real crime, but what exactly does it entail? Let’s dive into some specifics surrounding home title theft, and a few ways you might protect yourself as a homeowner.

What is home title theft?

Home title theft is a type of real estate fraud. It occurs when a person fraudulently claims ownership to a property that they do not rightfully own. It may include the physical theft of documents, but often occurs when a fraudster impersonates the home owner or falsely claims to own property. Often, the fraudster will obtain a victim’s personal information (like a social security number) and use the false identity to act as though the victim’s property is their own. Another common scenario involves a fraudster creating fake deeds to make it appear as though the legitimate owner has transferred their property to the fraudster. A deed is a document that gives a person an interest in property. It is the most common way a person receives “title” or legal ownership, called title, to real property. You can also receive interest through a last will and testament or a court order, but the most common instrument is a deed. Deeds are recorded in public records that are often accessible online. This means fraudsters can access copies of deeds without obtaining the original deeds, which people may store in secure places. Thus, it is possible for a fraudster to claim ownership to a property without accessing the original deed. Fraudsters will steal title in order to take advantage of the true homeowner’s equity by obtaining a mortgage or home equity loan. The fraudster may even attempt to falsely sell the property for profit.

What to do if your deed is missing or stolen

If you believe someone is attempting to claim an interest in your property, then you may have genuine cause to worry about title theft and should consider taking the following steps:

1. Contact your mortgage lender: Your mortgage lender will be able to help point you in the right direction. They may have a process for dealing with suspected title theft to help you protect your asset and prevent the fraudster from opening other accounts in your name.
2. Put credit bureaus on notice: If you believe you’re a victim of home title theft, you’re likely also a victim of identity theft. Fraudulent accounts that go unpaid may negatively impact your credit score. By notifying the credit bureaus and requesting a fraud alert be placed on your credit file, you’ll be able to prevent and dispute suspicious activity with more ease.
3. File a police report: Home title theft and identity theft are crimes. By filing a police report, you’re beginning paper trails that may help protect you if the situation advances.
4. File a Property Fraud Alert: Some localities offer a free service that helps members of the public protect their property from fraud by monitoring the property records for title theft. Contact your local appraiser or recorder’s office to see if your locality offers this service.

How to monitor and protect your home title

By now, you may be understandably interested in finding ways to more actively protect yourself from home title theft. One potential way to do so might be to get title lock insurance, a service that monitors your deed on your behalf. If there’s any suspicious activity or your title has been transferred under another name, the service is meant to notify you. While title lock insurance does use the word “insurance,” it’s important to understand that it doesn’t necessarily operate as a typical homeowners insurance policy would. Though title lock insurance companies offer notifications about your title, they typically only notify you after the deed (no pun intended) has been done. Title locks don’t generally troubleshoot the issue or provide any sort of coverage for it.

Is a home title lock necessary?

A home title lock (or title lock insurance) isn’t required for homeowners. While home title theft is certainly a scary concept, it isn’t known to be common, so the money spent on a title lock subscription might be put to better use elsewhere, like investing in your home. You may also want to consider getting title insurance before you become a homeowner, which helps clear up and protect future claims against your property’s title.

In summary

Home title theft is a subset of identity fraud. It happens when someone successfully steals your deed and transfers your property under their name. They may try to borrow against your home equity or even attempt to rent or sell the property for personal profit. If you notice your deed is missing or suspect it was stolen, consider reaching out to your lender to discuss the best next steps to help protect your assets.