By Dan Harvey
My clients are calling. They are frantic: “is my title safe?” “can someone steal my title?” “can someone get a loan against my house?” “AM I ABOUT TO BE EVICTED?!”
I’ve seen the Title Lock TV commercial. I understand the fear. The commercial is slick: it has powerful graphics, dramatic music, authoritative figures from government and the FBI, and victim impact statements.
It also features a scammer who testifies to how easy it is to “steal your title.” He claims: “it is easier than stealing a car.”
Really? Title theft is easier that car theft?!
Let’s test that ominous idea. Let’s call the fraudster “Freddie” and see how Freddie would do Maryland:
Freddie has targeted YOUR house. Let’s say It is worth $300,000; it also has $100,000 mortgage, and thus $200,000 in “equity” (value less debt). It can be in Baltimore City, or any of the Maryland Counties.
The fraud begins with a bogus Deed, created by Freddie, where he forges your signature to transfer the house to himself, and applies a fake Notary.
Next this Deed must be RECORDED. Recording is the process by which real estate is formally transferred among the tax records and Land Records.
A Deed has certain legal requirements for recording, including a “certificate of preparation.”
The certificate of preparation is usually signed by the Maryland attorney who wrote the deed, but it can also be signed by “a party to the instrument.” If Freddie is receiving the property, AND he prepared the Deed, then the Clerk will have the first indication that something is not right.
That’s not all. A Deed must be submitted with an “Intake Sheet.” The Intake Sheet gives the Clerk detailed information about the property and the parties to the transfer. More clues to the authenticity of the Deed.
Additionally, in many jurisdictions, a “Lien Certificate” is required. A Lien Certificate is the County’s way of certifying that all debts to the municipality -- property taxes, water/sewer bills, front foot -- are paid in full. Would Freddie understand this, and voluntarily pay open taxes or other bills? Doubtful.
Finally, if Freddie satisfied all these requirements of the recording process, then he still faces the technical requirement of Transfer Taxes. Transfer Taxes are collected based upon the “consideration” stated in the Deed, and it is the Clerk’s job to collect them whenever required.
We would expect the consideration in this case to be the fair market value of $300,000, or at least the assessed value. Freddie says it is zero. Why? Is there family relationship? Is the property free and clear of mortgages? What is the deal? People do not give away valuable property.
The Clerk will consider the document presented, look at the assessment records, and the land records, and reject the Deed for lack of transfer taxes -- which, in this example, would be $7,500 in Baltimore County. Would Freddie amend consider this a cost of doing business and pay the transfer taxes? Doubtful.
These legal, procedural, and monetary safeguards are, in my opinion, sufficient reason to answer “no, you do not need Home Title Lock.”
Stick with cars, Fred.
But what if the Deed DOES go through? What if your title IS transferred to Freddie? Can he get a loan? Can he borrow against your property, stealing your equity, and setting you up for foreclosure?
To be answered in the next post.
Dan Harvey is President of Cotton Duck Title Company.
He has been searching land titles, writing deeds, and conducting closings for over 30 years.