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Debbie Lee, a title officer for Chicago Title's Los Angeles operation, opened a title–only order for a $425,000 residential purchase. The transaction was opened by an independent escrow company that has done business with Chicago Title for more than 30 years.
A preliminary report was issued October 28, 2016, reflecting the property owners, Steward and Shirley, husband and wife as joint tenants. They had owned the property since 1973, and it was free and clear of any encumbrances.
The independent escrow agent ordered an amended title report, stating the property had been transferred to a trust. Debbie found on November 22, 2016, a deed was recorded purportedly by the owners of the property transferring ownership into a trust which named an unknown third party as trustee. Debbie amended the report and called for a copy of the trust agreement or trust certification.
The trustee submitted a nine page trust agreement to the independent escrow agent to send to Debbie. Debbie examined the trust agreement and found the unknown third party trustee was actually listed as a child of Steward and Shirley. There were three children named in the trust agreement, the trustee did not share the same last name as the other two siblings.
On December 6, 2016, the escrow officer sent the documents to Debbie to record — a deed and two deeds of trust. The instructions to Debbie were to record the following business day and to issue an owner's policy in the amount of $425,000 and two loan policies of title insurance in favor of two hard money lenders in the amount of $500,000 and $60,000.
Prior to recording, Debbie checked the public records to ensure nothing new had been recorded since the preliminary report had been issued and amended. Debbie noticed a probate case under the name of Steward.
The Order for Probate showed Steward died June 23, 2014. The deed transferring the property into the trust had supposedly been signed by Steward and Shirley on November 10, 2016. How could he have signed a deed more than two years after his death?
Debbie halted the recording and brought the file to the attention of her title operations manager, Tony Taranto. The next morning, Tony called the attorney listed on the probate to confirm their suspicion that the deed transferring the property into the trust with an unknown third party trustee was a forgery. The attorney responded as follows:
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"Wow! I have never seen something so fraudulent and I have been a lawyer for 30 years. First, Steward and Shirley are both dead. Attached are their death certificates.
Second, Steward's estate is being probated, hence any sale of real property is subject to court approval. I am attaching a conformed copy of Letters Testamentary designating Steward's widow (the woman Steward married after Shirley's passing) as administrator of the estate.
Third, I have met with the family previously and conferred with Steward's widow a moment ago that the name of the trustee on the deed is not part of Steward's family. This case is a fraud and I request the appropriate notice be made part of title stating at the minimum any sale of the property is subject to court confirmation pursuant to a Notice of Sale which is currently being published.
Thank you and all of your colleagues for the excellent work. Please accept Steward's widow and my deepest appreciation."
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Debbie notified the independent escrow agent of the fraud and then cancelled her title–only order, making a note in the title plant records of the need for confirmation from the court prior to insuring a future sale involving this property. Her note in the records not only protects Chicago Title from possibly insuring another fraudulent transaction, but all the other title companies with access to the title plant records.
Debbie's actions were indeed heroic. She saved the Company from a potential claim from the new buyer and new lenders, if they were not in on the crime.
Had Debbie recorded the deed conveying Steward's property and the deeds of trust encumbering the property, Steward's widow could have taken legal action against our Company. The Company has shown its appreciation for Debbie's expertise and integrity, by rewarding her $1,500 along with a letter of recognition.
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