Real estate scammers have become very brazen these days. Armed with only a few forged documents, they are staking out the rights to multi-million dollar homes of millionaires. These scammers can claim to own a home they've never set foot in, and the law often gives them dubious benefits. So once their false claims are incorporated into the system, it can be a nightmare to remove.
So how do these scams work? And more importantly, how can you protect yourself from becoming a victim of fraud?
Learn now: 5 housing markets that will plummet in value by the end of 2025
Read next: How to get rich in real estate starting with just $1,000
Trending: Want to retire rich? Suze Orman says she's missing this key money movement
How do fraudsters forge certificates?
Recent advances in technology have made it incredibly easy for fraudsters to forge and file documents online. Information about real estate and its owners is usually very easy to obtain from public records. Fraudsters can use this information to create fake deeds and file them with the local county recorder's office. This means that ownership has effectively been transferred to you.
The false deed has now been recorded and is part of the official record. Scammers may take advantage of the property by trying to sell it or take out a mortgage. Even if you can't steal the house outright, it can cause a huge headache for the real owner.
Also discovered: 5 cities where homes will be completely stolen within 2 years
How long will the fix take?
To fix this, the property owner would need to take the issue to court and provide proof that the deed is a forgery. But this is neither easy nor easy. Courts move slowly and the burden of proof falls on the rightful owner. Resolving the mess can be difficult and can be a months-long, even years-long battle. And during this period, owners cannot sell or refinance their property.
According to a recent article in the Wall Street Journal, that's exactly what's happening right now at Spelling Manor, the 56,500-square-foot mansion built by television producer Aaron Spelling. The alleged fraudsters filed a deed with Los Angeles County earlier this year claiming they were the owners. The courts are still considering the matter, and in the meantime, the real owners are stuck.
Who is at risk?
If you are very wealthy and own a home in the Los Angeles area, you may be a target for this type of scheme. Luxury properties are popular targets for scammers. That's because wealthy people typically own their real estate outright. If there is still a mortgage on the property, it will be harder for scammers to scam you with a false deed. Without a mortgage, lenders may be less cautious than they would be with a loan.
warning signs
The scary thing about title fraud is that it can happen without you even realizing it. If you receive unexpected mail addressed to someone else on your property, especially something like an official document, that could be a red flag. Another sign is if your property tax bill suddenly stops arriving. This could be because the scammer has changed your contact information on file and you are receiving an invoice instead.
If you are in the habit of regularly checking your property records, you may be able to spot these red flags early. But most homeowners don't do this. There are also title monitoring services that monitor your records. Alerts you about changes or new applications to your property so you can take immediate action.
Details of GOBankingRates
This article originally appeared on GOBankingRates.com: How Scammers Are Seizing Million-Dollar Properties — Is Your Real Estate Safe?
