Jenna Monnie, a closer with Hillsborough Title in Florida, received a new order for a sale. The sales price was $185,000. She had worked with the buyer's real estate agent in the past, but not with the listing agent.
The listing agent seemed to be very familiar with the status of title. From the beginning he told her, "Oh don't worry about the corrective deed on the title commitment, I happen to know these people and I can get this notarized and bring you the originals back in."
This struck Jenna as odd, she was not sure what the listing agent was referring to since she did not have the Commitment for Title Insurance yet.
Jenna opened the order in her processing system and soon the Commitment was ready. It had three unnerving requirements:
- Warranty Deed from Skip D. Dover and Eileen Dover, his wife to Duane Pipe.
NOTE: The purpose of this deed is due to an incomplete legal description in the Quit Claim Deed recorded in Official Records.
- Affidavit satisfactory to the Company from Skip D. Dover and Eileen Dover must be furnished to the Company and recorded in the Public Records. The Affidavit must state that Affiants' marriage to each other has been continuous and uninterrupted from July 6, 2006, through the date of the execution and delivery of the instrument(s) establishing the estate or interest or mortgage to be insured herein.
NOTE: Search of the Public Records revealed judgments that attach against one party in the marriage. If this affidavit cannot be produced, then the Company must be notified and reserves the right to make additional requirements.
- Record in the Public Records a release or satisfaction of the Claim of Lien, in favor of Strip Your Equity, Inc., recorded in Official Records.
Prior to the deed in which the seller took title to the property, the last transfer of title occurred in 2006. The owners of the property for 14 years, suddenly transferred title via quit claim deed to a limited liability company. Less than 30 days later, that LLC transferred title to an individual who was the seller Jenna was working with.
Neither transfer of title occurred with the benefit of title insurance and the deeds were not prepared by an attorney. As a result, a mistake occurred. The legal description used on each deed was incomplete, which is the reason for the first requirement listed on the commitment.
It is highly unusual and can be considered suspicious for individuals to sell their property via quit claim deed. This is a form of deed used to transfer any title, claim or interests in a piece of property from one person or entity to another person or entity.
A quit claim deed makes no assurance the person or entity transferring the property has valid claim to it nor does it provide any warranties or guarantees to purchasers of property, even if the sellers, themselves, caused the title defect which impairs the value or use of the property.
The quit claim deed is more often used as an estate planning tool to transfer real estate between family members or into a trust; not to sell to a third–party buyer. Therefore, the title officer required a warranty deed from the previous owner in this transaction.
The second requirement listed on the commitment was due to a document found in the chain of title which indicated Eileen E. Dover was married to a Ben Down in 2010; not Skip D. Dover. Jenna and her colleagues tried multiple times to track down the Dovers with no luck. They all wondered if Skip passed away at some point and Ben was Eileen's new husband.
Just one week before the scheduled closing Strip Your Equity, Inc. recorded the lien described in the third requirement. Jenna learned the principal owner of the company was also the listing agent — who claimed to also own a construction company.
This was the last straw for the closer who asked her title officer to perform additional searches which revealed other title insurance companies had refused to close and insure transactions with the same listing agent.
An underwriter reviewed the chain of title and discovered the signatures of Eileen E. Dover on the quit claim deed recorded recently did not match other documents she signed in earlier years. As a matter of fact, she did not use her middle initial in any other documents she executed. Jenna resigned from the transaction immediately.
Preventing Title Fraud
There are a number of ways title companies take steps to prevent this kind of crime. They carefully review the documents found in the chain of title. They look for discrepancies in the spelling or signatures of a person's name. Documents are executed by notaries who have been previously vetted and specialize in real estate transactions.
Title insurers examine the chain of title and sometimes find fraudulent activity. If a fraudulent document is identified, the title company works to clear it up before closing or declines to insure the property.
Settlement agents should be sure the address where the property tax statement is sent is up to date. If the title has been transferred the tax payer statement will be changed. It is best to inquire with the county property appraiser and county tax collector's websites to confirm the owner has not changed.
Unfortunately, not all transfers of title have to be insured by a title insurance company or handled by an attorney. Transactions that were not insured or handled by an attorney are often given extra scrutiny.
Homeowners can take steps to protect their ownership. One of the ways to do this is to sign up for credit monitoring. This service notifies its subscribers anytime a creditor makes a credit inquiry so consumers can confirm whether they recently applied for credit or not. This notification is key if a fraudster steals the homeowner's identity and then attempts to obtain a loan secured by the owner's property.
Purchase title insurance in order to insure against potential title defects in the event that a purchaser is a victim of fraud that affects title to the property.
In this story, the buyers were very grateful for all of Jenna's efforts and relieved they did not purchase a property from a seller who may not legally own the property. For a homeowner, burglars are not the only crooks they should be concerned about, but by following these tips, homeowners can protect themselves from being a victim of title fraud.
Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration