Meant to improve transparency in real estate transactions, recent moves by municipalities to place property and sales records online has led to a spike in fake home sales, a rising threat to homeowners in cities such as New York, Chicago and Detroit. A recent Wall Street Journal story chronicles the increasing prevalence of deed fraud, which has reached "epidemic" proportions in Harlem. The story of Sybil Patrick, whose brownstone was sold without her knowledge for $750,000, illustrated the prevalence of the issue; four people were arrested for allegedly forging deeds for Mrs. Patrick's property, one of 30 they targeted in Manhattan.
Deeds, mortgages and other documents stored online and open to the public can provide a wealth of information for would-be criminals. By cobbling together signatures, addresses, emails and phone numbers, they can access additional information, and then quickly forge paperwork and place properties on the market. By selling below market value and accepting quick cash offers, they're able to rapidly make a profit before many owners realize what's happening.
The New York City Department of Finance currently has 120 cases of deed fraud under investigation, according to the story, both Detroit and Chicago have also seen an uptick in similar cases, and a New York Post article from last fall says Brooklyn has also been hit hard. Detroit, which has seen an influx of out-of-town and foreign buyers purchasing property sight unseen, presents a situation ripe for exploitation. In many cases, including those in New York, legitimate lawyers and brokers get involved without knowing they're helping criminals.
How can these crimes be stopped? Many officials who have dealt with these cases are still pushing for online records, since the documents are public record and making them easily accessible speeds up real estate sales. In New York, the Department of Finance has begun automatically notifying owners when a new deed is recorded for their property.
∙ How To Avoid Scams During Every Dismal NYC Rental Search [Curbed New York]