You may have heard people jokingly refer to Cook County as “Crooked County,” since there have been allegations of illegal title transfers involving both residents and government officials alike. You may also recall last year’s news coverage on a home seller who hijacked ownership from Lauren Lake, a local man who legitimately purchased his Riverdale home, using a practice known as deed shifting. And, while we would like to think that our public servants are held to higher standards, there was also a widely-publicized case where a Recorder of Deeds office clerk, named Regina Davis, was caught accepting cash bribes to illegally prepare backdated documents. While any given location may be home to real estate fraudsters, there are now a number of local policies and procedures in place to help investors protect themselves from fraudulent title transfers.

Understanding and Mitigating the Risks of Property Fraud

Anyone can fall victim to property fraud, but investors are amongst the more vulnerable targets. Often, we approach distressed homeowners facing foreclosure and find abandoned or otherwise unoccupied properties. It appears that nobody is looking after the property and that’s exactly where swindlers see their opportunity. Since County Recorders are not legally positioned to validate the legitimacy of deed transfers, the documents are open to all sorts of acts of forgery. Criminally-minded individuals falsify documents that enable them to quietly sell a property (often to themselves!) or acquire a mortgage. Other cases of fraud involve the vindictive placement of false liens that cloud a property’s title. With multiple properties changing hands, it’s easy for investors to lose track of the details. Beware, however, as failing to actively protect your title interests could result in lengthy legal disputes that could tie up your investment dollars.

Recorder of Deeds Karen Yarbrough recently championed new state laws designed to remedy the situation. Recognizing the bind that Recorders faced when real estate fraud occurred right under their noses, she promoted better document security for property owners. Here’s a rundown of how the current laws can benefit you:

• The Fraudulent Filing Bill (HB 2832) empowers County Recorders to assist property owners who have been victimized by fraud, as they can now utilize an expedited administrative law review process. A judge can now efficiently determine the legitimacy of a document and, if it’s found to be fraudulent, order that a notice be placed in the chain of title. This negates the impact of the fraudulent document and relieves the potential cloud on the title. Previously, any questionable deed documentation had to be addressed by the chancery or circuit courts, which was a time-consuming ordeal that came with a significant price tag for legal assistance. Even worse, the process of clearing up title issues held the power to potentially delay or even halt a real estate transaction.
• The Anti-Fraud Bill (HB 2295) bolsters the documentation requirements for notaries. It mandates that notaries both keep and forward their records of every document related to transfer of residential real estate property to the County Recorder. In effect, this creates a secondary touch-point for maintaining ownership data consistency. This new piece of legislation also enables law enforcement to more readily investigate in the event that a document’s legitimacy comes into question.
• The Title Clouding Bill (HB 2905) significantly increases the penalties for illegally clouding a property title. Previously a misdemeanor, those who are found guilty of causing more than $10,000 in damages through unlawful clouding will face consequences in line with a Class 4 felony. This finally provides some justice for investors who may suffer substantial financial damage as a result of criminal title clouding.

In addition, the Cook County Recorder of Deeds office provides a free property fraud alert system. For those who sign up on their website, a software program will check daily for any new recordings on your properties and if any changes are detected, property owners are alerted with a phone call or email. If the change was the result of an activity you know about, such as a refinancing or transaction, then you have peace of mind. However, when an unexpected alert arises, you can act quickly to remedy the fraudulent situation before any negative consequences arise.

As investors, property transactions are our livelihood and we need to protect our assets. Investors must identify and utilize the tools and resources that are available. Joining the network of HomeVestors® franchisees can introduce you to a support network in which you can share ideas and resources like the legal remedies outlined here for maximizing investment business potential. When things go wrong (and, they sometimes do), you can rely on their seasoned expertise. If you are interested in joining our ranks as a franchisee, get in touch today!

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Image Source | Flickr user Thomas Hawk