Tangled Title and Deed Fraud How to Protect Yourself and Your Family

1. Tangled Title and Deed FraudHow to Protect Yourself and Your Family Elizabeth Shay, Esquire Homeowners Assistance Program Coordinator SeniorLAW Center Roxane Crowley, Esquire Homeownership Attorney, Philadelphia VIP Susan Wysor Nguema, MSW Homeownership Advocate, Philadelphia VIP (Co-Author, Susan will not be presenting today)

2. What does it mean to have title to a home? • Title is the legal concept of property ownership. • A deed is a legal document that confirms a person’s ownership of property, or that the person has title to the property

3. A Deed

4. Why is it important to have title? • Ability to enter payment plans for back real estate taxes and water bills • Access to home repair programs for low-income homeowners • Ability to take out a mortgage or negotiate modifications of existing mortgages • Ability to sell the property • Ability to leave the property to someone in your Will

5. What is a “tangled title”? • Tangled Title is a phrase used to describe problems related to legal ownership of real estate. • If you live in a home and consider yourself the homeowner, but your name is not on the deed, you may have a tangled title.

6. Types of Tangled Title Family Owned Properties (Title is in the name of a deceased relative) Lease/Purchase or Rent-to-Own Agreements Fraudulent Conveyances

7. Family Owned Properties • Problems occur when the homeowner passes away and family members continue to live in the home without transferring title. • Living in a property, paying real estate taxes and maintaining the property does not make the heir the owner.

8. Example 1:There was a Knock on the Door • Harvey owned a house and lived in it with his wife, Wilma. (Wilma was not named on the deed.) Harvey died unexpectedly and did not leave a will. Wilma continued to live in the house alone. • 10 years after Harvey died, Wilma received court papers. The city was foreclosing on the house because of unpaid real estate taxes. Wilma called the city and was told that only the owner can prevent the sale by entering into a payment plan for the back taxes.

9. Example 1:There was a Knock on the Door (cont.) • Wilma went to an attorney to have her name put on the deed to the house. The attorney explained that because Harvey did not have a Will, the state law controls how Harvey’s property passes after death. Harvey’s two children with Wilma and his five children from a prior marriage all have ownership interests in the property. • The only way for Wilma to be the sole owner is to have all of the heirs transfer their interests in the property to her. Wilma has never met some of her stepchildren and has no way to locate them.

10. Lease-purchase or rent-to-own agreements • What is it? • Buyer and seller agree that buyer will pay for the house in installments while living in the property. When all payments are made, seller will transfer title to the buyer. • Why? • An option for people who want to own, but don’t have the credit or saving power to purchase outright or to obtain a mortgage.

11. Example 2: Renee and Olivia • Renee is renting Olivia’s property. Olivia offers to sell the property to Renee and will accept installment payments of the purchase price. Renee agrees and signs the installment sales agreement. • Renee makes payments for 15 years and continues living in the property. Renee makes repairs and improvements to the property. After the final installment payment, Renee calls Olivia and asks when she will transfer the deed to her.

12. Example 2: Renee and Olivia (cont.) • Scenario 1 • Olivia tells Renee that she is willing to transfer the deed, but there is as a mortgage on the property which Olivia took out after Renee started making her installment payments. Olivia has been paying the mortgage but can no longer afford to do so once Renee stops paying her installments. • Scenario 2 • After Renee makes her last payment, Olivia tells her the property taxes have not been paid and the city wants to sell the property. • Scenario 3 • Renee has been making payments, but after nine years the payments start coming back in the mail. Renee drives out to Olivia’s house and discovers she has moved and Renee has no information where Olivia is now living.

13. Fraudulent Conveyances Forged Deeds Contractor Fraud / Home Repair Scams Mortgage Rescue Scams / Equity Stripping

14. Fraudulent Conveyance Defined • Homes can be sold by persons pretending to be the owner. • The true owner’s name is removed from the deed. • The true owner must then prove, legally, that she owns the property • The fraudulent owner can re-sell or mortgage the property • How does title get stolen? • True owner leaves the property due to temporary move, such as hospitalization, incarceration, military deployment, or death of owner

15. Example 3: That’s MY House! • Sam lived in the same house for 30 years. At 78, he was living alone and doing well until he had a bad fall and broke his hip. Sam had to spend 2 weeks in a hospital and 1 month in a rehab facility. • When Sam finally returned to his house, he found a family he didn’t know living there -- the Kirbys. Mr. Kirby told Sam they bought the house from Jack for $200,000 three weeks ago. • Sam contacted a lawyer and found out that Jack transferred the property to himself by forging Sam’s name on the deed. Then Jack sold the property to the Kirbys. • The Kirbys do not want to leave the house and Sam has nowhere to go.

16. Example 4: Bad Contractor • Harry sees an ad in newspaper: “Make repairs to your home. No money down!” He calls the number and arranges for Robert, a general contractor to inspect the home. Robert writes up a work order for renovations to the kitchen, bathroom and roof – price $25,000. • Harry has bad credit and cannot get a loan to make the repairs. Robert tells Harry not to worry, that he has a friend in the banking business who will loan Harry the money and take a mortgage on his house. A few days later Ben, the banker, calls Harry and tells him his bank will arrange a loan to Harry so the work can begin immediately. • The closing is held in Harry’s house. The loan documents and mortgage reflect that Harry is borrowing $33,000. A check for $25,000 is given to Robert for the renovations. The balance is paid to Ben as appraisal fees and closing costs.

17. Example 4: Bad Contractor (cont.) • The renovations start then stop. Robert tells Harry that his crew is working on another job but will return to the house in a few days. No one comes, and Harry calls Robert again. The calls are not returned. Harry’s house has been torn apart by the contractors. • Harry contacts a lawyer and is told that Robert is not a licensed contractor and has no business address – his only contact is a cell phone and P.O. box. • Harry now has a mortgage on his home which he must pay even though the renovations have not been completed and Robert has disappeared.

18. Example 4: Mortgage Scam/Equity Theft • Marco lost his job and can’t pay his mortgage. While watching TV, Marco sees an ad promising to “Save your home from foreclosure.” Marco calls the number and a few days later Steve visits Marco at his house. • Marco tells Steve that he should be returning to work soon and only needs a loan to tide him over. Steve agrees to help Marco for an immediate upfront payment of $1,500. In exchange, Steve will pay the $4,000 arrears on Marco’s mortgage and continue paying the mortgage until Marco is employed. Marco is told he must stop all communication with his mortgage company.  

19. Ex. 4: Mortgage Scam/Equity Theft (cont.) • Steve prepares a deed for Marco to sign making Steve the owner of the house. Steve promises to transfer the house back once Marco returns to work and can repay the money Steve has paid to the mortgage company plus interest. • Marco signs the deed and Steve immediately refinances the debt, paying off not only Marco’s mortgage, but taking out an additional $25,000 secured by the new mortgage. • Steve disappears with the cash. The new mortgage is not paid and the mortgage company files a foreclosure action. Since Marco is no longer the borrower on the mortgage, he does not learn of the foreclosure until he received a notice of foreclosure in the mail.

20. Prevention & Solutions How to Avoid & Solve Tangled Title Issues

21. Prevention: Family Owned Properties • Homeowners should: • Write a Will to decide in advance who gets the house • Probate estate of record owner as soon as she dies • If some heirs of the record owner do not want to keep their interests in the property, they should sign a deed giving away their interests as soon as the record owner dies

22. Solutions: Family Owned Properties • Probate estate of record owner and find all heirs to put title in name of heir(s) who actually want to own the property

23. Prevention: Lease/purchase or rent-to-own agreements • Make every effort NOT to enter into these agreements • Make sure agreement is with the real owner of the property • How to check: Department of Records in your county • The agreement should be in writing, include the property address, signed by the parties, especially the seller, and state how much is to be paid and for how long • Notarize and record original agreement with the Department of Records • Keep ALL receipts, including receipts for • Signed receipt from seller for every payment • Repairs • Improvements to the property • Real Estate tax payments

24. Solutions: Lease/purchase or rent-to-own agreements • Quiet Title Action in Common Pleas Court • Settlement or Judicial Order • Negotiate with the record owner to get title signed over

25. Prevention: Fraudulent Conveyance Homeowners: • Never sign any documents that you do not understand or have not read • Keep informed & read all mail. • If the city sends a notice telling you that a deed has been recorded for your property, investigate immediately and contact legal assistance. • Be concerned if you stop receiving the tax bill for your home. • House should never appear vacant • As a neighbor to collect mail, mow grass, and shovel snow to keep home from looking vacant • If it seems too good to be true, it probably is.

26. Prevention: Fraudulent Conveyance Mortgage Rescue Scams • If someone promises to: • Save home from foreclosure • Obtain a loan modification • Get extension on time to cure a default, or • Arrange a short sale or deed in lieu of foreclosure   • He cannot • Charge a payment in advance • Can’t say “Don’t call your servicer/the bank” When hiring a contractor: • Research who you are dealing with • Attorney General’s Website • Better Business Bureau

27. Prevention: Fraudulent Conveyance Buyers: • Buyers Beware • Title Report • Title Insurance • Find out who is living in the house • Are they tenants or do they have any right to be there? • If it seems too good to be true, it probably is.

28. Solutions: Fraudulent Conveyance • Quiet Title Action in Common Pleas Court • Settlement or Judicial Order • Check with District Attorney to see whether they are investigating the scam • If you suspect fraud, seek legal advice immediately! • Create “clouds” on title • Big problem for true owner if gets a mortgage on property

29. Resources To find an Attorney or Obtain Legal Advice: • Philadelphia Legal Service Agencies (Call for intake procedure) • Philadelphia Legal Assistance: 215-981-3800 • Community Legal Services: 215-981-3700 • SeniorLAW Center: 215-988-1242 • SeniorLAW Hotline – statewide: 1-877-727-7529 • Must be 60 and over, no income limits • Philadelphia Bar Association’s Lawyer Referral and Information Service: 215-238-6333 • Connects callers with private attorneys in Philadelphia; not free legal services

30. Resources Pennsylvania Attorney General’s Office www.attorneygeneral.gov • AG’s Elder Abuse Hotline: 1-866-623-2137 • Call to report abuse or consumer fraud • Determine if a home-repair contractor is registered: hicsearch.attorneygeneral.gov City of Philadelphia • Department of Records, Reference Division: City Hall Room154 • Research property records, obtain copies of deeds • Register of Wills: City Hall Room180 • Raise an estate, determine if an estate has been opened

31. Questions? Elizabeth Shay, Esq. Homeowners Assistance Program SeniorLAW Center 215-701-3207 Roxane Crowley, Esq. Homeownership Attorney Philadelphia VIP 215-523-9570 rcrowley@phillyvip.org