Title Fraud

[rbarz]

It looks as though I was the victim of title fraud...

A guy files a deed with the county deeding himself a house without the owner knowing.

Shops the title policy around, finds Fidelity National Title will issue the policy.

Sells house at a discount and Fidelity issues me a deed.

Fidelity contacts me a month later to let me know that I probably don't own the house but not to worry because the "bulk" of my funds are safe (I paid cash for the house). Which doesn't make sense because the title company should at least be responsible for the entire amount paid for the house.

Apparently this is the new scam and it sounds easier to do than mortgage fraud. So to all you flippers, I say watch out because the title company is acting like their liability is limited, i.e. all the money I spent fixing the house is gone. Also, if I had a loan, then I would have to continue paying the notes while everyone battled out who is responsible. Not to mention the owner of the house now needs to fix the roof I took off and what if the owner doesn't like the walls I rearranged for her?

I'll update the post after I meet with my attorneys.

Does anyone have experience with this type of scam? What were the results?

[musicman]

several variations have been happening as well.

1) people are putting for sale signs on properties that have been in foreclosure. they promise a clear title as well. when you call the law firm who handles these properties for the county they'll tell you it's a scam.

2) they are also changing locks on foreclosed/empty properties and then renting them out. when the real owner (or county) finds out, the renters are out of their money.

[flipper]

Something similar happened to a friend of mine. A "wholesaler" got a lot on MLS under contract for WAY less than the list price and assigned it to my friend for ~20k extra. My friend closed with cash at the title company and started drawing up plans for a new house. Meanwhile, he put the "spec" house on the MLS.

The new listing broker got an angry/confused call from the "actual owner" of the lot. Turns out some scammer convinced the original listing agent that HE was the owner (out of town owner) and got the lot on the MLS and walked away from closing with ~$150,000. I'm pretty sure the title company refunded my friend the entire amount. The real owner now resold the lot.

I don't know if the scammer was caught.

flipper

It looks as though I was the victim of title fraud...

A guy files a deed with the county deeding himself a house without the owner knowing.

Shops the title policy around, finds Fidelity National Title will issue the policy.

Sells house at a discount and Fidelity issues me a deed.

Fidelity contacts me a month later to let me know that I probably don't own the house but not to worry because the "bulk" of my funds are safe (I paid cash for the house). Which doesn't make sense because the title company should at least be responsible for the entire amount paid for the house.

Apparently this is the new scam and it sounds easier to do than mortgage fraud. So to all you flippers, I say watch out because the title company is acting like their liability is limited, i.e. all the money I spent fixing the house is gone. Also, if I had a loan, then I would have to continue paying the notes while everyone battled out who is responsible. Not to mention the owner of the house now needs to fix the roof I took off and what if the owner doesn't like the walls I rearranged for her?

I'll update the post after I meet with my attorneys.

Does anyone have experience with this type of scam? What were the results?

[rbarz]

The title company is certainly responsible for the price of the home, but are they liable for the rehab that has already been done?

Is the title company's liability limited to the Title policy amount?

[missjanel]

Yes, the title company's liability is limited to the amount of the title policy. The same stands true for buying land. If you buy land and then build a house the title company is only liable for the amount that you paid for the land.

The title company is certainly responsible for the price of the home, but are they liable for the rehab that has already been done?

Is the title company's liability limited to the Title policy amount?

[rbarz]

Let me add this:

It had been a month since I purchased the property and the title company contacted me about the "problems", which is fine, I can see why it would normally take a while to figure out something is wrong. Except the title company never sent my money to the seller! They must have known from the beginning that something was wrong, but let me close and didn't bother to let me know for an entire month (while I spent $20,000 on the place).

I'd imagine a different cause of action would get around the contractual limit. Unfair trade practices, gross negligence, etc.

[Achieve]

Let me add this:

It had been a month since I purchased the property and the title company contacted me about the "problems", which is fine, I can see why it would normally take a while to figure out something is wrong. Except the title company never sent my money to the seller! They must have known from the beginning that something was wrong, but let me close and didn't bother to let me know for an entire month (while I spent $20,000 on the place).

I'd imagine a different cause of action would get around the contractual limit. Unfair trade practices, gross negligence, etc.

There is a definite problem that the title company was aware of if this is the case. Always-Always examine your chain of title, and beware anything that has a transfer that is under 6 months old.

[missjanel]

So what happened, did you get your money back? Including the money you spent on renovations?

Let me add this:

It had been a month since I purchased the property and the title company contacted me about the "problems", which is fine, I can see why it would normally take a while to figure out something is wrong. Except the title company never sent my money to the seller! They must have known from the beginning that something was wrong, but let me close and didn't bother to let me know for an entire month (while I spent $20,000 on the place).

I'd imagine a different cause of action would get around the contractual limit. Unfair trade practices, gross negligence, etc.

[rbarz]

So what happened, did you get your money back? Including the money you spent on renovations?

I finally have an update...

The title policy has no strict language limiting their liability to a certain value and the Texas Board of Insurance clearly states fraud is covered by the policy. The title company's higher-ups decided that their liability was going to be determined by an appraisal of the property valued at the time of loss. The appraisal came back at more than what I was requesting from the title company (which was the HUD price and fees, plus renovation costs) and the title company paid it! Even though it took way to long to get this done, I no longer hate Fidelity

Now I can focus on the other house I was scammed on... Lawyer's Title sucks

[Yonkers]

I finally have an update...

The title policy has no strict language limiting their liability to a certain value and the Texas Board of Insurance clearly states fraud is covered by the policy. The title company's higher-ups decided that their liability was going to be determined by an appraisal of the property valued at the time of loss. The appraisal came back at more than what I was requesting from the title company (which was the HUD price and fees, plus renovation costs) and the title company paid it! Even though it took way to long to get this done, I no longer hate Fidelity

Now I can focus on the other house I was scammed on... Lawyer's Title sucks

Thanks for the update. I'm glad things turned out well. But that so sucks these things happen.