From eager beavers to phantom fraudsters, here are the tricks you need to watch out for.
The world of title insurance is full of highs and lows. On the positive side, title agents often get to help aspiring buyers achieve their dream of home ownership. On the other hand, doing this work, and doing it well, means having to stay vigilant for a wide variety of cyberthreats. Seller impersonation fraud is one such danger. A rising industry threat, seller impersonation fraudsters use various tactics to deceive buyers, sellers and industry professionals alike. From “eager beavers” to “phantom fakers,” here are the top five seller impersonator personas you need to know.
I. The “Eager Beaver”
The first seller impersonation persona is the “Eager Beaver.” These fraudsters thrive on creating a false sense of urgency, pushing transaction participants to rush through the process. When deploying this tactic, a fraudster will offer a variety of reasons why the property sale must be completed as quickly as possible, including:
Financial necessity
Upcoming travel or relocation
Legal concerns or necessities
Health problems that could imperil the transaction
Alternative offers
We find that many fraudsters use this approach for one simple reason: it is often effective. Property sales can be intimidating and overwhelming to many people. Applying pressure can cause stakeholders to bypass organizational processes and procedures, which are in place for a reason, and lead to costly mistakes down the line.
II. The “Meticulous Mimic”
“Meticulous Mimics” rely on ID forgeries to pass themselves off as property owners to carry out fraudulent transactions. Of course, these criminals aren’t using the type of fake IDs you would find tucked into the wallet of your average high schooler. In fact, they are usually equipped with nearly flawless replicas of IDs, deeds and other sensitive documents. These fraudsters often put on airs of being overly prepared and highly detail oriented. Meticulous Mimics are a formidable threat because they excel at lulling other stakeholders into a false sense of security.
III. The “Sneaky Sparrow”
In the animal kingdom, there are many species that target the vacant homes of other animals for their own gain. Sparrows are one example. Sparrows are infamous for invading other birds’ nests.Unfortunately, real estate and title agents have their own “Sneaky Sparrows” to deal with. These are seller impersonators who target unoccupied homes.They fabricate a claim of ownership and then sell the property before the real owner even realizes what’s happened.
IV. The “Detail Devil”
Next up are the “Detail Devils,” seller impersonators who are experts at targeting properties that have complex ownership histories and dense details. These bad actors know how to navigate tangled webs of property information and exploit the confusion these transactions can understandably cause. Whether it be by manipulating legal frameworks or financial records, these fraudsters excel at turning convoluted property documents into illegal paydays.
V. The “Phantom Faker”
Finally,you can’t discount “Phantom Fakers,” fraudsters who attempt to pass themselves off as deceased property owners. They often use a combination of forged documents to fabricate a claim of ownership on a given property. Their schemes benefit greatly from the real owner no longer being capable of defending or disputing their behavior, which makes it easier to fraudulently sell or transfer a targeted property.
Stay safe with Alliant National and SecureMyTransaction
Knowing the most common seller impersonators can give you a leg up on potential fraudsters, but leveraging the right technology is key to truly securing your transactions. Alliant National’s SecureMyTransaction is one such solution, offering advanced tools to guard against today’s threats, including seller impersonation fraud. This new security solution also provides detailed audit trails, helping title professionals simplify compliance and protect their clients with greater confidence. Learn more about SecureMyTransaction here.
Understanding the impact of co-ownership on property is crucial for avoiding costly mistakes in real estate transactions. Major life events — such as marriage, divorce, or inheritance — can all significantly affect title and how it’s conveyed. To ensure the right parties are involved and proper procedures are followed, it’s important to grasp the key distinctions between ownership types that come into play when life changes and property conveyance intersect.
Title to real property may be held by sole individuals or entities, termed as sole ownership, or by two or more parties, termed as joint ownership. How joint owners hold title may impact how they convey title when they elect to sell the property, who can convey title if a co-owner passes away, or how property is treated if there is a dissolution of marriage. Depending on your state, the implications in each situation may determine how documents are prepared. A title company may ask for more information to have title conveyed by the appropriate grantor(s) and to also have title held by the grantee(s) pursuant to their wishes based on the permitted state laws.
Understanding the terminology is helpful when considering who may need to execute a conveyance deed or execute a mortgage/deed of trust, or how joint owners may want to take title to real property.
SOLE OWNERSHIP
Sole Ownership is just as it sounds, meaning that one person or entity owns the real property and has complete control over it.
JOINT OWNERSHIP
Tenants in Common is used when co-owners can take equal or unequal shares in the property. SeeThe Law Dictionary. Each co-owner can do what they wish with their share, but only as to their share. For example, a person with a 25% ownership interest in the property can convey their 25% interest (or less) to another person. If a co-owner passes away, their interest will pass to their estate. In this case, the heir or beneficiary of the decedent’s estate will become a tenant in common with the other owners. If the deed is silent to how the co-owners hold title, typically this joint ownership type is viewed to have been created.
Joint Tenancy with the Right of Survivorship allows co-owners to hold title jointly and equally when the four unities are present. These unities are unity of time, unity of title, unity of interest, and unity of possession. SeeFindlaw. If the four unities are broken, then the co-ownership typically changes to a tenants in common. In states that recognizes Joint Tenancy with the Right of Survivorship, upon the death of one of the owners, that ownership is automatically transferred to the remaining surviving owner or owners.
Tenancy by the Entireties is a co-ownership only available for a married couple. In this joint ownership, each spouse owns the entire estate and on the death of one spouse, the real property remains the sole ownership of the surviving spouse. In states that recognize this joint ownership, the deed may only show that they are a married couple (i.e., husband and wife) without any particular wording. However, if the deed does not identify that they are a married couple may cause the real property to be held as tenants in common. Currently there are 25 states that recognize this joint ownership.
Community Property is property owned in common by married couples, or either, during marriage, when not acquired as their separate property. SeeThe Law Dictionary. Each person has an undivided one-half interest in the property by reason of their marital status. Property that was acquired before the marriage, however, typically remains as their separate property. There are also cases in which certain property that is acquired during the marriage and is placed only in the name of one spouse, may be that spouse’s sole and separate property. In the latter, to assist with making it clear, the other spouse may typically execute a written consent and relinquish title, interest and any rights by executing a disclaimer deed and have the instrument recorded in the county land records. There are currently nine (9) states that are community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Take a look at each state’s statutes as to how community property is treated in the state.
Let’s look at a few examples of these joint ownerships in action.
Scenario 1
The parties live in a state that recognizes Tenancy by the Entireties. Jake Smith and Vivian Smith acquired title as husband and wife. They are now selling the property, and the prepared deed may read as follows:
Jake Smith and Vivian Smith, husband and wife, as Grantors, to Monica Walker, a single person and Christopher Walker, a single person, as Joint Tenants with Right of Survivorship, as Grantees.
In this case, presuming both are still alive and are still married to each other, then to convey title, the grantors, Jake Smith and Vivian Smith, should execute the deed conveying title to Monica Walker and Christopher Walker.
As for the grantees, you may have noticed that the marital status also shows for each grantee (i.e., in this case, “a single person”) and how they are to hold title under their joint ownership is specifically identified (i.e., “Joint Tenants with Right of Survivorship”).
Scenario 2
Let’s use the same parties but change the situation slightly regarding the grantors. In this case, Jake Smith and Vivian Smith previously took title to the real property without any reference to their marital status. Now they are selling the property, and the conveyance deed was prepared as follows:
Jake Smith and Vivian Smith, as Grantors, to Monica Walker, a single person and Christopher Walker, a single person, as Joint Tenants with Right of Survivorship, as Grantees.
In most states, in this situation, the grantors are found to hold title as Tenants in Common. As you may recall, if prior to the conveyance Jake Smith passed away, for example, then his interest would go to his heirs or beneficiaries of his estate, depending on the probate laws of the state.
Also, in this situation, we are missing the grantor’s marital status. As a best practice, the parties’ marital status should be reflected on the deed when they acquired title and when they convey title. The purpose of this is so that any marital interest in the property may be addressed. Thus, it may be required that the spouse of the grantor also executes the deed to convey their marital interest in the property to the grantees, depending on your state.
Scenario 3
In this last scenario, what happens if Jake Smith and Vivian Smith, as husband and wife, acquired title but while in title, their marriage is dissolved? Jake Smith now says he wants to sell the property.
In this situation, a complete copy of the final judgment to dissolve their marriage should be obtained from the family court records. Also, as a best practice, the final judgment should be recorded in the county land records. Recording of the final judgment provides notice that the joint ownership was severed and how the property was distributed by the court. It is important to thoroughly read the final judgment regarding who was awarded the real property. For example, the court may order that both parties will continue to hold title, which means they most likely are holding as tenants in common. Alternatively, the court may have ordered one party to execute a deed to convey title to the other party. In the claims department, on occasion, we do find that the court’s instruction to execute, and record, a deed was not completed. This may lead to extra legwork in either having to find the other party for a deed to the other spouse and to have it recorded in the county land records, or to go back to the court for it to enter an order declaring the title is in the spouse and record the new order in the county land records.
CONCLUSION
With everyday life changes, a person may take title as a single person but may be married when they are ready to convey title, for example. From sole ownership to joint ownership, and from marital property to non-marital property, understanding terminology and gathering accurate information to uncover how parties hold title and the proper parties needed to convey title, these all play an important role in real property ownership.
This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.
A contract for deed agreement is nothing new. These agreements are between a current owner of the property (the “legal titleholder”) and a person who is interested in purchasing the property from the owner (the “equitable interest holder”) but may not be eligible for traditional financing (or for other reasons), and the owner agrees to finance the transaction. The equitable interest holder typically takes possession of the property in exchange for making monthly or other periodic installment payments, along with possible other obligations, to the legal titleholder. If all the terms in the agreement are successfully satisfied, the legal titleholder is expected to transfer the title by deed.
Contract for deed agreements are frequently not recorded in the county land records. However, as an example, Texas requires executory contracts be recorded by the seller within thirty (30) days from the date of execution or the seller may be liable for damages to the other party for noncompliance. In Texas, such a recorded executory contract is treated as a deed with a vendor’s lien. See Tex. Prop. Code § 5.076 and 5.079. Other states also have statutes addressing executory contracts.
Contract for deed agreements have been the subject of many lawsuits. Generally, a lawsuit can be the first opportunity for a non-party to know that an unrecorded contract for deed agreement exists. A claimant is either sued or discovers the conflict through other communication, typically from the equitable interest holder. The claimant, at times, files a notice under its title insurance policy seeking coverage for such disputes. As each case is different and depending on the specific title policy, a coverage determination will be unique to the situation. Therefore, it is important to be aware that contract for deed agreements exist and that they may impact a new buyer’s title or a lienholder’s interest in the property.
The claims team has encountered situations involving contract for deeds. For example, a lender may be preparing a foreclosure action involving a recorded mortgage or deed of trust when it discovers a lawsuit naming the lender’s borrower. The plaintiff alleges it entered into a contract for deed agreement with the prior owner several years earlier. The plaintiff states the prior owner failed to execute the deed to the plaintiff at the completion of the terms of the agreement and now seeks a recordable deed to the property, free and clear of the lender’s lien. The plaintiff also argues it timely satisfied all obligations under the contract for deed agreement before the seller sold the property to another and the lender’s lien attached to the property; and thus, alleges that the subsequent transaction is clouding the plaintiff’s title and is void. There may be various legal and equitable defenses for the lender in such a lawsuit, but the time and expense incurred may be significant.
Practical Pointers
Before closing on a home, there may be ways to uncover and address a contract for deed agreement before the issue culminates into contentious litigation for new buyers and lenders. Here are some steps to consider:
If the seller asserts there is a tenant occupying the property, ask if there is or has been any contract for deed agreements (a/k/a installment purchase/sale land contract) with the tenant or any other party.
If there is a contract for deed and the intended purchaser has defaulted or violated the agreement, request written documentation identifying that the contract for deed agreement is cancelled. In certain cases, this may require legal action by the seller to establish that the equitable interest is extinguished. It is recommended that this documentation be recorded.
If the terms of a contract for deed are still in effect, however, the seller and the intended purchaser mutually agree to terminate the contract, it is recommended that a written termination of the contract for deed agreement between the parties be obtained and recorded.
Last, if the intended purchaser under the contract for deed is unwilling to release their equitable interest or asserts that the legal titleholder has violated the agreement, then contact the anticipated title underwriter and the proposed lender prior to the closing date to discuss what options may be available for the situation.
A contract for deed remains a resource to help some with the home buying process. However, the impact of such an agreement can later result in a challenge to the title and impact others when a dispute arises between the parties in the agreement. If you have questions, reach out to me or any member of the Alliant National claims team.
This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.
As borrowers struggle with increased prices for almost everything, it’s no surprise that making monthly mortgage payments has also been an issue. In the last few years, it has been reported that foreclosures have steadily increased.[1] Thus, lenders have sought to exercise their rights granted under either a mortgage, security deed, or deed of trust to force a sale of the collateral due to the non-payment of the debt.
In many cases, whether it is a purchase money loan or a refinance, the lender may purchase and obtain a loan policy of title insurance to protect the lender’s interest from a variety of covered risks.
As a lender prepares to initiate a foreclosure either by a judicial foreclosure or a non-judicial foreclosure, it may run a title search on the property to determine ownership along with other liens, judgments, encumbrances, and easements involving the property and the borrower. Title matters that present themselves involving the validity, enforceability or priority of the insured mortgage lien that were not excepted or excluded from coverage, and occurred prior to the date of the title policy, may lead the lender to submit a notice of claim to the title insurer seeking a coverage determination under the title policy.
The top seven title issues submitted by lenders to the Alliant National claims team include:
Unreleased prior lien or mortgage;
Spousal marital status is missing or is incorrect on mortgage;
Spouse does not execute the mortgage;
A notary acknowledgment issue;
Error in the legal description or the legal description is missing;
The mortgage was not timely recorded; and
A complete copy of the mortgage was not recorded (i.e., missing a page).
Happily, strong post-closing procedures and attention to detail can easily prevent each of these issues. Let’s look at a scenario and use it to analyze a few different situations.
Scenario
An unmarried couple – we’ll call them the “buyers” – enter into a purchase contract with John Doe (the “seller”). The sale is scheduled to occur in 30 days. The buyers let you know that they are so excited as they are getting married in two weeks and that this is going to be their first home. The seller has two mortgages or deeds of trust on the property, as well as a recorded monetary judgment. All are properly indexed in the county land records. The parties are ready to close on schedule.
First situation: Thirty days later, the buyers are now married; however, the prepared deed to vest title to the buyers, and the new mortgage or deed of trust shows them as unmarried. What do you do?
Of course, one should not proceed with having the documents executed until they are corrected to reflect the proper marital status as of the date of closing. It is also important to mention here that one should also verify the proper names of the parties (including business names, trust, etc.), and that the names are correctly spelled.
Second situation: The closing occurs. The documents are executed but the notary misses acknowledging one of the pages in the mortgage or deed of trust for one of the buyers. The instrument is then recorded.
In this case, it’s important to have the mortgage or deed of trust re-executed, re-acknowledged and then recorded in the county land records. However, in some states, there may be an option to have the notary execute a Notary Affidavit. Check with your state to see if the latter is available and the cases for which it is appropriate.
Third situation: The closing occurs. The instruments are not sent to the county land records for recording until 60 days later.
Because of the delay in recording, it’s possible for another interest holder or lienholder to record an instrument in the “gap period,” the time between the closing date and the recording date. Keeping the gap period small lowers the risk that someone else will record an instrument that could challenge the lender’s priority.
Fourth situation: The closing occurs. The lender prepared the mortgage, and it identifies that an Exhibit A will be attached to show the property’s legal description. The mortgage is recorded without Exhibit A being attached.
In this case, it’s important to promptly have the mortgage or deed of trust re-executed, re-acknowledged and attach Exhibit A with the legal description; and then record in the county land records. In a few states, there may be an option to remedy the matter with a correction affidavit. Check with your state to see if the latter is available.
Fifth situation: The closing occurs, and the funds are disbursed. No additional review or follow up with the prior lenders or judgment creditor is conducted for the recorded release or satisfaction of the lien. One year later, these have not been released in the county land records. The current lender is now foreclosing, and the new foreclosure title search shows the items as unreleased in the county land records.
We understand that there may be challenges in getting the respective party (lender or creditor) to record a release or satisfaction if it is on that party to do so; however, this is part of the post-closing process. Being persistent and diligent will help ensure that the county land records accurately reflect the status of the mortgage or lien. There are several states that have enacted statutes that impose on lenders and creditors a prescribed time limit to record a release after payment. Also, in a few other states, a title company or a title insurer may have the ability to execute a release if certain requirements are met and if the lender or creditor fails to do so. Check with your state to see what options are available.
As you can see, title companies can impact the lender’s foreclosure process in a big way. By taking the time to catch the “little” things, you can help reduce the likelihood of claims submitted by lenders under loan policies.
If you have any questions, we’re here to help! Please feel free to reach out to me at: mhawkins@alliantnational.com.
This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.
[1] Bates, M. (2024, April 11). ATTOM: Foreclosure Filings Increased 3 Percent in Q1
In the automotive world, each vehicle is uniquely identified by a vehicle identification number (VIN), a distinct code used by the car industry. This identifier is used in various ways, such as for insurance and department of motor vehicles records, ensuring each vehicle is clearly and accurately tracked.
There is a similar concept that applies in the area of real property, and it’s not the parcel identification number shown on a county appraisal district or a property appraiser or assessor’s website. The true identifier for real property is the property’s “legal description.” However, errors with a property’s legal description can lead to complex issues affecting transactions. Let’s discuss some common issues and strategies to prevent and address these problems.
Legal descriptions come in various types, such as metes and bounds, or plats, just to name two. The legal description is created by a professional surveyor and is used to locate and identify the real property it describes. This information is located on deeds, deeds of trust, mortgages, and other instruments pertaining to real property. Without a legal description, it is nearly impossible to determine where a property is located and the boundaries of the property on the ground. Absent a legal description, it is also extremely difficult to determine who holds title to the property, who can convey title, what property is being pledged as collateral to secure a loan, and much more.
At Alliant National, the claims team regularly sees cases involving legal descriptions. Here are just a few of the more common issues:
the legal description is not included with the recorded deed, mortgage, or deed of trust;
the legal description is incomplete;
the legal description has typographical errors;
the legal description references an incorrect subdivision or references an erroneous plat book or page; or
ownership of property is being challenged due to a gap in the property or an overlap of the property’s legal description with that of a neighboring property owner.
When a legal description is missing or not correctly identified in an instrument, it may result in a title claim involving intervening conveyances or liens on the real property. In some cases, a person may not be able to convey title to property they believe they own, or they may face challenges from others who believe they have better title.
Legal description issues can be timely or difficult to cure. In some states, there are statutes that permit certain legal description errors to be corrected through the use of a correction affidavit. However, states that have such corrective statutes generally limit their use and have certain requirements that must be met before a correction affidavit may be utilized. If the situation is not covered or the requirements are not met under the statute, then a correction affidavit is not available. In those cases, it may require a corrective instrument be obtained from a party or costly litigation. Even though it is not an exhaustive list, the Resources section below includes links to a few states’ corrective statutes.
Familiarizing yourself with your state’s laws is crucial to understand if there are corrective statutes relevant to legal descriptions, along with their specific limitations and requirements.
Happily, experience teaches that attention to detail can significantly reduce the occurrence of legal description issues. Here are a few tips for avoiding legal description headaches:
Purchase Contract and Addendums. If parties make changes to the purchase contract’s legal description, make sure to have those changes incorporated into your real estate closing platform to ensure, when it is time to print documents, that the documents properly reflect the accurate legal description.
For example, the parties may have originally contracted for Lots 1, 2 and 3, Main Plat. Subsequently, through an addendum, the contract now only dealing with Lots 1 and 3, Main Plat. Make sure the documents reflect only Lots 1 and 3, Main Plat.
Who else should know of changes? Let your team and any third-party vendor know of any changes made to the legal description since the last time products were obtained and request that the products be revised, and new products issued to reflect the change. Then, distribute the revised products to the proper parties.
Remember to let the lender know of any changes to the legal description as soon as you know. Lenders may use this information to obtain an appraisal of the property to determine its value and may have to adjust the lender’s underwriting review.
In some cases, if the lender prepares the deed of trust or mortgage, it may pre-print the legal description on the instrument. Review the instrument prior to closing for accuracy of the legal description. If the legal description is inaccurately reflected, contact the lender immediately to discuss.
Review and ask questions. If a survey was purchased or a prior survey is being reviewed showing the property’s legal description, review the survey for any differences shown in the seller’s vesting deed (and those in the chain) against what is being prepared to be conveyed. If there are differences, ask questions and review with the surveyor and the parties to clear up any discrepancies and document your file indicating how the parties addressed and resolved the situation.
The parties. Review all documents prior to the closing to ensure they accurately reflect the legal description the seller intends to convey and the buyer intends to purchase. Don’t forgot to review and compare any legal description changes that the parties agreed to in the contract or purchase contract addendum.
Recording. When sending the instrument to the county recorder’s office, remember to include the correct legal description with the instrument.
Policies. When a final title policy is issued, review to make sure the correct legal description is included in Schedule A before sending it to the recipient.
Taking a moment to thoroughly address a property’s legal description can greatly reduce potential errors that could lead to claims. If you have questions, please feel free to reach out to me or any member of the Alliant National claims team. We’re eager to help!
This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.
This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.
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