As a real estate agent, you’re entrusted with guiding your clients through the complex world of property transactions. In today’s digital age, concerns about property ownership and title fraud have become increasingly common. One term that might have caught your attention is “Title Lock.” But before you recommend this service to your clients, let’s take a closer look at what it really means and how to effectively protect their ownership.
Understanding Title Lock:
You might have heard about Title Lock, and it may have been presented as a safeguard against property title fraud. But it’s important to make a clear distinction here – Title Lock is not the same as title insurance. Title insurance is a one-time purchase that offers protection against legitimate claims to ownership prior to the purchase date. It’s a wise investment that we recommend every buyer to consider.
On the other hand, Title Lock claims to protect against a specific type of fraud – title fraud. This is when a scammer forges your client’s name on a deed, transfers the property ownership, and uses it as collateral for loans. However, it’s crucial to understand that Title Lock is not an insurance policy. It’s a monitoring service that checks if a title has been transferred out of your client’s name. Unfortunately, it doesn’t prevent or actively protect against fraud; it simply notifies your clients after the damage is done.
Title Lock vs. Title Insurance:
- Title Lock is a service to monitor property titles, not an insurance policy.
- Title Insurance is a one-time purchase that protects against past ownership claims.
- We recommend Title Insurance for all home buyers for better protection.
The Reality of Title Fraud:
Let’s delve into the process of title fraud to better understand the risks. Scammers target properties, often vacant or secondary homes, and gather personal information from various sources. They assume your client’s identity and manage to transfer the property ownership using forged documents. The next step for them might be to sell the property or borrow against its equity, which could lead to foreclosure notices landing on your client’s doorstep. The frightening part is, your client might not even realize their ownership has been taken until it’s too late.
How Fraud Happens:
- Scammers forge a homeowner’s signature to transfer property ownership.
- They might use the property to take out loans, leading to possible foreclosure.
- Homeowners might not know they’ve been victimized until financial damage has occurred.
Protecting Your Clients:
Now that we’ve outlined the potential risks, let’s focus on how you can help protect your clients’ ownership:
First and foremost, educate your clients about the risks of title fraud. Ensure they understand that Title Lock is not a solution that prevents fraud; it’s a monitoring service that notifies them after the fact. Encourage your clients to be vigilant about their personal information. They should treat their sensitive details like valuable assets and shred documents containing personal and financial information. Suggest that your clients regularly review their credit reports and financial statements for any unauthorized activities. Look for unfamiliar charges, accounts, or withdrawals, and act swiftly if anything seems amiss. Advise your clients to periodically check with their local recorder of deeds to ensure no unauthorized property transfers have occurred. Make sure they verify that their contact information is correct with the county. If your clients suspect identity theft, they should take immediate action. File a complaint with the Federal Trade Commission (FTC), report the crime to local law enforcement, and consider placing fraud alerts or freezes on their credit reports.
- Educate Clients About Risks:
- Inform clients that Title Lock is a post-fraud notification service, not a preventive measure.
- Promote Vigilance:
- Advise clients to protect personal information like they would any valuable asset.
- Sensitive documents should be shredded to prevent information theft.
- Regular Monitoring:
- Clients should check credit reports and financial statements for strange activities.
- Keep an eye out for charges or accounts that don’t make sense.
- Check Property Records:
- Recommend clients regularly verify their property status with the local recorder’s office.
- Contact information should be kept up-to-date with county records.
- Immediate Action Steps:
- If identity theft is suspected, clients should quickly file a complaint with the FTC.
- Report the issue to local law enforcement.
- Consider placing fraud alerts or freezes on credit reports.
While Title Lock can offer some peace of mind through alerts, it is not a foolproof solution. Real estate agents should steer clients toward proactive, preventative measures to truly protect their property. By providing the right guidance, agents can reinforce trust and ensure clients’ long-term property security.
Written by Title & Escrow Professional, Susan Larsen at Land Title Company