I’ve been hearing a lot about a service called Home Title Lock lately on talk radio advertising and in conversation. I decided to dig into the situation this service claims to protect you from.
A description of what might happen in Home Title Theft and protection against this happening to you goes something like this. First, let’s suppose a nefarious individual records a forged deed that transfers the ownership of your home from your name to their name without your knowledge. Second, the thief gets a loan against your home and disappears with the money. You are left with your home title that was recorded technically in someone else’s name and a lien against your home.
Impossible? Well, no. It could happen in the right circumstance. When documents or deeds are recorded by the County Clerk and Recorders Office it becomes a matter of public record. However, they are not scrutinized to make sure the document is legal or that the grantor and grantee are who they say they are.
In what I just described, at least two things come to mind. First, how likely would it be that a new lender will not research that the new borrower has good title to the property? Also, was title insurance issued to you when you bought your home cover this event? In other words, are you already covered by your title policy for this type of event?
The advertising I have heard talks about loans made against your home without you knowing about it. The advertising also touts the headache you will endure to get title for your home back in your name and not owe the lender for a loan you did not make. Is this possible to happen to you? Well yes, it could. But again, it would require that a lender make a loan, however small or large, against your home without full knowledge of who has good title and not requiring a new title policy that would clearly establish ownership. In most cases the lender will require this new title commitment, so in making a new loan they can be sure they have rights to an enforceable lien against the property that is the collateral for the loan and be assured the title is not fraudulent.
In a December 2019 article by Nathan Hannah, attorney, with DeConcini, McDonald Yetwin &Lacy Attorneys, he says: “The bigger question about Home Title Lock in my mind is whether they are selling a service that’s not even necessary, or at least not anywhere near as vital as their advertising suggests.” He explains that the typical title policy issued — called an America Land Title Association (ALTA) Policy of Title Insured — contains at least two sections of coverage with this language: “Someone else claims to have rights affecting your title because of forgery or impersonation.” and “Any of [the] Covered Risks… occurring after the Policy Date.”
The statements of coverage seem straightforward. However, when I asked a local spokesperson at Fidelity National Title, their opinion was different. It is because an ALTA Title Policy is issued at the time of purchase or new mortgage is put in place and is always a look back in time. In other words, the policy covers events through the date of issue, not future unforeseen events.
Back to the question, “Is Home Title Lock a valuable service to property owners?” The point to be made here is that Home Title Lock seemingly cannot lock your title so nothing can be recorded. So, in essence their service description simply says they will immediately notify you if this event takes place and assist you in reversing a fraudulent title recordation. You may also want to speak with your homeowners insurance provider about coverage for this. Many homeowner policies offer identity theft coverage for an additional fee.
Michael Harper is owner/broker of Michael Harper Real Estate. Contact him through his website, MichaelHarperRealtor.com.