Has someone stolen my home? Will I be evicted? Is all my equity gone?
Sounds like you’ve just heard one of the many TV and radio ads about home title theft.
Yes! They’re everywhere. It must be a major problem.
Well, hold on. You can’t believe everything in an ad, especially when it uses fear to promote a product.
But it sounds serious. I want to protect my home, and I plan to use my equity for retirement.
Of course, that’s exactly what they want you to worry about. After all, they just happen to sell the answer to all those worries: home title theft insurance. What you should be asking though is: How big of a deal is home title theft? And, do I really need to pay for insurance to protect myself against it?
Are you suggesting this is all a bunch of hype?
As with most advertisements, there’s a kernel of truth to what’s said. But it’s still far from reality. Let me provide some perspective by answering your questions. That way, you’ll have a better understanding of home title theft and can avoid wasting money on something you don’t need.
Okay!
First, what is home title theft?
Home title theft is a form of fraud, where a scammer forges your name on a deed and files it with the county, making it look like they’re the property owner. From there, the thief could try to sell your home to an unsuspecting buyer, cash out your equity or take out a loan, using your home as collateral.
Yikes! That sounds bad.
So, how worried should I be about home title theft?
Not very worried at all.
While home title theft can happen, it’s rare for a variety of reasons. In fact, the name is a little misleading.
A scammer can easily find a blank deed form online and then fill it in with information that is available through public records. But here’s the thing: while the scammer can file the deed in the records room of your county courthouse, it’s not a legitimate claim.
So, forging a deed does not really mean someone has stolen your title.
After all, the signature on the deed must be certified by a Notary Public, who is required by law to verify your identity.
And by law, only you can transfer your title to another party. It’s up the potential buyer or lender to perform their due diligence on a property’s title. Should they enter into an agreement based on a forged deed, they are on the hook for any money given to the scammer – not you, as the legitimate property owner.
Whew, that’s a relief! I feel bad for any conned buyers though.
Well, chances are slim of a scammer getting past the various safeguards in place by lenders, real estate agents and title companies. Just think of all the hoops you had to jump through – from credit reports and employment verifications to tax returns and appraisals – to purchase your home. It’s highly likely any fraudulent title activity will be uncovered.
Plus, home buyers are almost always required to purchase title insurance. Title insurance protects buyers against defects in the title, including liens, fraud and forgery. Any respectable real estate agency won’t even let you buy a property without it. If the title company is duped by a forged title, then they must pay for any damages.
Got it. But I suppose it wouldn’t hurt to have an extra layer of protection, just to be safe.
Should I then buy home title theft insurance?
No.
First, it’s important to know that a title protection service is not really insurance. That is, it does not protect you from a scammer fraudulently transferring your title.
Rather, home title theft insurance is essentially a deed monitoring service that periodically checks to see if your title has been transferred out of your name. If it has, they notify you only after it has happened. They don’t help you resolve any problems created by a scammer.
Secondly, in most counties, homeowners can check their title status/land records themselves online for free or sign up for a free county consumer text notification service. Since these title protection services provide information that is already free and available, they are not really worth it.
Plus, many banks and credit card companies provide alerts of changes to your credit report, which will alert you of any fraud, including if someone has stolen your identity and may try to forge a deed for your home.
You may want to be more worried about scammers posing as title protection services. As more companies try to scare people into paying for title protection, more scammers are also taking advantage of them. If someone’s emailing you or calling you to get you to sign up for title protection, they could be trying to con you.
That makes a lot of sense. I guess it’s harder to know who to trust these days. Is there anything I should do?
One thing you can always do if you have concerns about your financial assets is to speak with a financial adviser. Other than that, remember to just ignore all the hype.
Unlike home title theft, long-term care insurance isn’t a scam. But it may not be the best option for funding your needs, if you need long-term care. For information on ways to cover the costs of long-term care, download our white paper “Options for Funding Long-Term Care Expenses.”
