Laying Down The Law – Beware Of Title Fraud

Arizona’s real estate market is seeing a trend in title fraud cases involving unencumbered and unoccupied properties. In a recent case, the true property owner discovered a forged deed in their chain of title after the owner happened to drive by their vacant lot and noticed a For Sale sign by a local REALTOR®. The owner was shocked to see that the property was for sale because the owner had not listed the property for sale and had no intention of selling the property. The owner later discovered that a fraudster had forged a Warranty Deed purporting to convey the property to a third-party co-conspirator. The fraudsters then quickly sold the property to a third party for below market value.

Unsuspecting REALTORS® and escrow officers may become unintentionally complicit in title fraud if not careful. Moreover, REALTORS® and escrow officers may be legally liable to the true owner under a negligence theory if they assist with the sale of a property involving fraud and a forged deed.

The Arizona Association of REALTORS® and the Arizona Attorney General’s Office have identified the following common red flags for REALTORS® and escrow officers to beware of include: (1) out of state seller; (2) unoccupied or vacant property; unencumbered property (no mortgage); seller will only communicate via text message or email; seller has an address that is different than the property address or tax mailing address; seller wants a quick close and offers the property for sale below market value; seller insists on using their own out-of-state remote notary; seller requests that the proceeds be wired; seller’s two forms of identification include the identical photograph (it is physically impossible to genuinely have two separate forms of identification with the identical photograph).

If you or someone you know has become the victim of title fraud, the following steps should be immediately taken. First, provide written notice to the title insurance company. Second, a Lis Pendens should be recorded with the County Recorder’s Office and a lawsuit for quiet title and fraud should be immediately filed. Or, in the alternative to a lawsuit if a lawsuit cannot be immediately filed, the owner may consider recording an Affidavit of Fraud to alert unsuspecting buyers or lenders that the title to the property has been compromised.

Pursuant to new law passed this year, the County Recorder for each county has implemented title alert systems that allow property owners to be immediately notified anytime a new document is recorded that impacts title to their property. A.R.S. §11-467. Property owners can register for Maricopa County’s title alert here: https://recorder.maricopa.gov/MaricopaTitleAlert/Default

But the title alert system is only marginally helpful because it only alerts property owners after the title to their property has been converted, and the property owner must then go to Court to quiet title to their property.

Our team of real estate attorneys at Provident Law® have over 100 years of combined real estate law experience and are well equipped to resolve any real estate title dispute. If you or someone you know have an issue with their real estate title, contact our office today at (480) 388-3343 or online and schedule an appointment to speak with one of our real estate specialists.

Christopher J. Charles is the Founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). In 2017, Mr. Charles obtained one of the Top Ten Civil Verdicts for his client in a real estate dispute. Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions. Christopher regularly teaches continuing education classes at the Arizona School of Real Estate and Business, and he can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.

Christopher J. Charles, Esq.