What happens when scammers stop forging credit cards and start faking property deeds? Welcome to Real World: fraud edition.
In the battered housing market of Palm Beach, Fla., scammers have found a way to falsify "quitclaim" deeds on distressed properties and claim them as their own. And with hundreds of empty homes lingering on the market in the hard-hit city, fraudsters have a huge inventory from which to choose.
A quitclaim deed is a transfer of property in which the homeowner "quits" ownership and transfers the property to a recipient. These contracts are particularly prone to foul play, because the owner does not guarantee ownership of the property or that the title is clear and free. Essentially, the recipient could accept a property that was never the grantor's to give.
"Scammers are renting [stolen properties], mortgaging them, and walking away," Sharon Bock, County Clerk and Comptroller of Palm Beach County, Fla., told AOL Real Estate in a phone interview.
Bock says the legal conditions in Florida are especially conducive to quitclaim fraud, because of the state's open records laws. "Anybody can come in with documents that meet legal requirements – a buyer, a seller and signatures. We can't go beyond that to decide if it's fraudulent. We are bound by law to record that document."
The scam works like this: Fraudsters search for vacant homes in the area. Through public access websites, they find court documents related to the sale – everything from the homeowner's name, the seller and their signatures. The con can then file for a quitclaim deed with phony signatures and proceed to claim the property for their own. Because these scammers prey on vacant homes, the entire transaction can occur before the bona fide owner is even informed. And by that time, a new tenant (or the scammer himself) could be living in the home.
These scams are particularly prevalent in states like Florida, where lax open record laws are abused to exploit a large population of "snow birds" – vacationing homeowners who are absent several months of the year.
"You have conditions here where we have a wonderful set up for a scam artist," Bock said.
Approximately 92,880 foreclosures were filed in Palm Beach County between 2007 and 2010, according to the Palm Beach Post. And it's not just modest or dilapidated homes being targeted by scammers.
Ronald and Heather Nicholls, the former owners of a 4,400-square-foot home in Loxahatchee, Fla., claim their home was illegally signed over to a couple posing as them while they were out of the country. The Palm Beach Post reports that the home was served with foreclosure papers in 2009, but that the Nichollses were actively trying to sell the home in a short sale. But to the Nichollses utter surprise, their home was already occupied.
And the Nichollses weren't the only ones caught in the confusion.
"I've never seen those people a day in my life," Jarrod T. Frederic, a notary whose signature appeared on the allegedly forged quitclaim deed, told the Palm Beach Post. Upon closer inspection, the quit claim deed has Ronald Nicholls's name misspelled and the signatures look strikingly different.
A representative at the Loxahatchee Sheriff's Office told AOL Real Estate that an investigation into the Nicholls' home is ongoing.
How to Protect Your Home from Quitclaim Cons
"Anybody that doesn't examine their credit report at least once a year is vulnerable," Bock says. But what homeowners often forget to consider, she said, is court records in their name. "Just as you check your credit rating, we recommend you examine your court records." This is especially important for homeowners in states where a large deal of personal information can be gleaned from public records.
"Just as crooks used to break into homes and push over the elderly, everything is electronic today," Bock says. "They're following the money, and getting very creative."
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