Notary Fraud / Deed Fraud Alert

By Tiffany Ross- Consumer Resource Officer & Bruce Rinne- Information Officer

Consumers need to be aware that there is now an organized effort of scammers engaging in deed fraud. They create deeds with false signatures of the seller, and have them illegally notarized by someone who is not a notary, or a real notary who was willing to accept a payoff and falsely notarize the document.  These fraudulent documents are being taken to the Registers of Deeds and recorded, transferring the ownership from the unsuspecting rightful owner, to a new owner, who may or may not be a real person.

If undiscovered, this property may then be listed and sold to a bona fide purchaser for value.  If this is the case, the new owner, this legitimate purchaser, is now the rightful owner of the property.  The money has been stolen by the fraudster, and the original property owner has had their property stolen from them.

There is typically nothing that the property owner in a case like this did wrong.  There is nothing they did to cause a scammer to target them, and if they are not made aware quickly enough, they may not be able to take action to stop it.

Many Register of Deeds offices in North Carolina now have a fraud alert that owners can sign up for to receive an email if there is any documentation filed against their property.  If a fraudulent document is discovered, the property owner must take immediate action to try to retrieve rightful ownership of their property.

Actions to Take Immediately:

  1. Contact Police and file a police report on the fraud.  Also submit a complaint to the FBI on their website
  2. Contact an attorney to file a lis pendens against the property, to prevent it from being sold to a bona fide purchaser for value.
  3. Continue to pay the taxes on the property, so that it will not be sold in a tax foreclosure auction as this would result in a sale to a new owner that could be legitimate.
  4. Work with law enforcement and an attorney to locate and serve the fraudulent ‘new owner’ with legal action.  Pursue a declaratory action to declare the newly recorded deed void as a fraudulent transfer.  This would legally return the property to its rightful owner.

If you have not been a victim and would like to know ways to help protect yourself or your property, you may consider registering your property on the Torrens System.  It is a lengthy and somewhat expensive process, but would prevent a property from being able to be fraudulently transferred.

There are other services that claim some ability to assist with protecting your identity/property, that offer monitoring and insurance you can purchase, that can assist you if you have to incur legal expenses to sue to reacquire your property.  Just like any other crime, you should be aware and take precautions to protect yourself and your loved ones as much as you can.  Keeping an eye on your property with the Register of Deeds regularly (some sources recommend monitoring your property weekly) is the best way to prevent yourself from becoming an unsuspecting victim of this type of scheme.

How You Can Protect Your Clients:

1 – Educate them!  The more people know, the more they can be on alert and check on their property more frequently.

2 – Be aware that fraudulent buyers and sellers are on the rise, and brokers must exercise extra caution in verifying both.  Be suspicious of would-be clients that will not meet with you by a video chat or means that will allow you to see and speak with them.

3 – Check the deed and public records for a property your buyer-client is considering purchasing, or that your seller-client is considering selling, to make sure that there wasn’t a suspicious recent transfer in ownership that could be fraudulent.  If suspicious, dig deeper, make efforts to contact the listing agent or seller if not listed, to be certain the due diligence has been performed to properly identify the seller as legitimate.

4 – If you discover that a fraudulent transfer has occurred, assist your client in taking immediate action described above to have the best chance of restoring their property, if they are the seller.  If your client is the buyer, notify the rightful owner of the transfer even if you are the buyer’s agent, as your duty to discover and disclose material facts is to all interested/involved parties, not just your client.