How can investors protect themselves from title fraud?

On Behalf of | Jan 13, 2025 | Real estate sales

Title fraud is a growing concern for real estate investors. Criminals can forge documents to claim ownership of a property or use fraudulent information to secure loans against it. Investors must take proactive steps to safeguard their investments and minimize risk.

Conduct thorough due diligence

Investors should verify the property’s title through a trusted title company or attorney. This process involves confirming ownership records and identifying any liens or encumbrances. Due diligence ensures the property has a clear title and reduces the chance of fraud.

Purchase title insurance

Title insurance protects investors from financial loss if title defects or fraud arise after the purchase. This insurance covers legal fees and other expenses involved in resolving title disputes. It provides peace of mind and financial security for real estate transactions.

Monitor property records regularly

Fraudulent title activity often targets properties with no recent transactions, such as rental properties or vacant land. Investors should monitor public property records to detect unauthorized changes. Early detection can prevent further fraudulent actions.

Secure sensitive documents

Investors must safeguard sensitive documents like deeds, mortgage agreements, and personal identification. Store these records in secure locations, such as fireproof safes or encrypted digital storage. Avoid sharing sensitive information unnecessarily to reduce the risk of identity theft.

Work with reputable professionals

Investors should engage with trusted real estate agents, attorneys, and title companies during transactions. Experienced professionals can identify red flags and verify the legitimacy of documents and parties involved. Reputable professionals provide an additional layer of protection against fraud.

Report suspicious activity promptly

Investors should immediately report any suspicious activity to the proper authorities. Quick action can help prevent further damage and assist in recovering lost assets. Contact local law enforcement or the county recorder’s office to address potential fraud.

Protecting investments requires vigilance and the right precautions. By following these steps, investors can reduce the risks associated with title fraud and ensure safer transactions.

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