The Wall Street Journal recently reported on how scammers tried to auction off Graceland—the estate that belonged to Elvis Presley in Memphis, TN and one of the most famous pieces of real estate in the country— and how scammers are now targeting Spelling Manor, the 120-room mansion in Los Angeles, built by Aaron Spelling, the television producer behind “Beverly Hills 90210”, “Dynasty”, “Fantasy Island”, “The Love Boat”, and “Charlies Angels” which is one of the most expensive houses in the world.
Similar fights over who really owns homes and land are playing out across the country. Using AI and publicly available information, scammers are stealing property, also called title theft. Their targets range from mansion to small homes and parcels of land. A study by the American Land Title Association and economic research firm NDP Analytics found seller impersonation fraud is fairly common. More than a fourth (28%) of title insurance companies experienced at least one seller impersonation fraud attempt last year. The FBI’s Internet Crime Complaint Center doesn’t track deed fraud, but last year it processed 9,521 real estate complaints which resulted in over $145 million in losses.
What is Title Fraud or Deed Fraud?
Title fraud, also known as deed fraud, is a type of real estate scam where criminals forge documents to transfer ownership of a property without the knowledge or consent of the rightful owner. Scammers typically obtain personal information about the property owner, such as Social Security numbers or other identifying details, and use this information to create fake deeds or other legal documents. Once the fraudulent documents are filed with the appropriate government office, the scammer can take out loans against the property, sell it to an unsuspecting buyer, or even attempt to evict the rightful owner.
Criminals make money from a forged deed by:
- Selling the home to a legitimate buyer and pocketing the profit
- Illegally renting out the property
- Opening a home equity line of credit (HELOC)
- Refinancing the mortgage to cash out the equity
These types of fraud can result in significant financial loss and legal complications for the victim, who may not realize their property has been compromised until they receive notices of unpaid loans or other legal actions. This is often the goal of scammers for most homes, but when it comes to large homes and mansions, the scammers take a different approach. With Spelling Manor, the scammers realize they probably won’t be able to take ownership or sell the mansion due to the deep pockets and ability of the owners to hire legal counsel. In these types of instances, the scammers are usually trying to extort money from the lawful owner by causing them enough problems to pay the scammer to go away.
AI tools make Title Fraud Easier
We’ve shared how scammers are using artificial intelligence (AI) and deepfake technology to pull off their fraud. Recently NBC Miami shared a story of someone who contacted a title company saying they had a lot to sell, but when the title company pushed for identity verification, the purported seller offered to do a video call. The call turned out to be a deepfake video of a missing woman from a different state. If the title company had not required additional proof of the seller’s identity, they could have gotten away with this scam. The first step in fighting this type of fraud is to strengthen the verification process for recording documents, particularly at the local government level. When someone files a new deed at a county clerk’s office, that office should have strong identity-verification to make sure the person who is filing that deed is who they say they are.
In addition to the use of AI in identity theft, criminals are using AI to learn and digest publicly available property data. The ability of AI to sort through enormous amounts of information gives scammers the information they need to target certain properties or real estate owners. A lot of property data is easy to find, and in some states, the information can include appraisal data, blueprints, transaction records, and pictures of executed deeds. Criminals can then make their fake documents quickly and more realistic when they have access to photos of these deeds, which often include signatures of property owners. An AI tool might can also help them quickly find vacant properties or homes without mortgages attached to them (which makes them targets for refinancing scams).
More Money, More Problems: Scammers Target Mansions
The bigger the property, the bigger the potential profit. Scammers like deep pockets, and when it comes to the owners of mansions, scammers have found a couple ways to put that money in their own pocket. Their first option is to try to convince others that they are the lawful owner of the property and list it for sale or secure loans using the property as collateral. Borrowing a book from the ransomware playbook, they’ve also found they can extort money from homeowners by being a nuisance. If they can create enough of an issue for the lawful homeowner, they might be able to extort them for a payout. The stories of Graceland and Spelling Manor highlight both.
Many where surprised recently when a company called Naussany Investments and Private Lending announced plans to auction off Graceland, claiming it owned the property. Although Riley Keough, the grandaughter of Elvis won a lawsuit, claiming the company used forged documents to claim ownership, it showed the potential for scammers to make a lot of money from valuable properties.
When Eric Schmidt — the former CEO and executive chairman of Google, with a net worth of $23 billion as of October 21 — expressed interest in purchasing Spelling Manor, it couldn’t be sold. The owner, suspected to be a Saudi billionaire, is in the process of trying sort out legal claims from scammers who allegedly filed a fraudulent deed with Los Angeles County earlier this year. Insiders believe the scammers are holding out for a payoff so the owner can complete the sale of the estate.
Title Fraud also Targets Regular Property Owners
Scammers aren’t just targeting deep pockets. Title theft is actually a much larger problem in smaller markets where local governments and consumers are much less familiar with the scam.
Unfortunately, a local recorder’s office is simply a library for property-related documents. Often, the recorder’s job is just to store and organize recorded documents, not to verify them. That is why real estate transactions most often require title companies and insurance when purchasing a property. It’s up to title companies to do the research and have safeguards in place to ensure they are dealing with the real property and owners.
William Gordon’s vacant land in Arizona was sold to someone else without his knowledge. He purchased the property in 1999, but at some point, a new deed was submitted to the Pima County recorder, using Gordon’s name, but changing his address. Gordon only realized the ownership transfer had taken place when his title company sent him a letter congratulating him on the sale of his property. Gordon was able to get his property back after the title company signed a quitclaim deed that relinquished ownership, giving him his land back. However, the ordeal cost him about $9,000 in legal fees.
Similarly, in Fairfield, Connecticut, a fraudster impersonated a property owner, who only discovered the sale after a friend told him that someone was building a home on his once-empty plot of land.
On most small real estate transactions, agents are trying to close as many deals as they can, which may be part of the reason why things are overlooked.
Signs You’re a Victim of Deed Theft
Take action as soon as you notice something suspicious, before criminals can do too much damage. Acting fast is crucial if you think you’ve fallen victim to any fraud. Look for these warning signs:
- You stop receiving utility bills or property tax assessment or bill.
- Utility bills on a vacant property rise suddenly, or you find people living there.
- You stop receiving your tenants’ rent payments or learn they’ve been making the payments to another person and location.
- You receive payment books or other information from a lender with whom you haven’t done business.
- You find yourself in default on a loan or notified of foreclosure proceedings.
How to Protect Yourself from Title or Deed Fraud
To protect yourself from this type of real estate fraud, it’s important to first purchase title insurance when buying real estate. Here are a few steps you can take to prevent deed fraud:
- Check if You Have a Title Insurance Policy or Buy One When Refinancing: When you buy a house or refinance, you can purchase enhanced title insurance through the American Land Title Association (ALTA). This is insurance that protects homeowners and lenders from financial losses due to defects in a property’s title, such as liens and fraudulent claims of ownership. It helps to ensure that the property owner has clear and undisputed ownership, providing peace of mind and financial protection against potential legal disputes or claims that could arise after the purchase.
- Check Mailing Addresses and Contact Information: Ensure the governmental authorities and businesses you work with have your correct information on file. Where possible, ask that former addresses and contact information be removed from databases (which can be vulnerable to breaches and could enable identity theft).
- Pay Attention to Incoming Bills: Keep a close eye on mortgage, tax, and water bills. Thieves often change the address on these bills to hide their crime, giving them more time to profit from the property. If you’re looking out for older family members, make a note of when they receive bills each month and ensure they continue arriving.
- Check the Status of Your Property Deed: Regularly check local registries or the county recorder’s office for land records and property deeds online. This can help you ensure that no one is trying to take over your ownership rights. If possible, set up notifications at the registry to alert you to any changes. While some companies offer monitoring services, such as Home Title Lock, which monitors your home’s deed 24/7 for a fee, you can protect yourself for free by periodically checking your property record on the website of your county’s register of deeds.
- Monitor Your Credit Reports for Signs of Identity Theft: Most people only look at their credit reports when applying for a mortgage or loan. However, to avoid becoming a victim of deed fraud, you should be more vigilant. The three major credit bureaus — Equifax, Experian, and TransUnion — offer a free credit report to consumers each week at AnnualCreditReport.com.
By taking these steps, you can significantly reduce the risk of becoming a victim of title or deed fraud and ensure the security of your property.