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Are "home title theft" and appearance of a new and genuine deed invalidating the property rights of a person previously secure in them, big concerns for owners of real estate in the US?
Enough of a problem that the State of Florida initiated a new pilot program to attempt to make it easier to detect early, and possibly prevent.
Although it adds friction to legitimate real estate transactions too, which is frustrating.
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No.
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Personal anecdote: When my grandfather (let's call him Alfred) unexpectedly died in a car crash at a relatively young age, the probate court split his house seven ways between his second wife Beatrice, the four children (Charles, Dorothy, Egbert, and my mother Francine) that he had with Beatrice, and the two children (Gerald and Henrietta) that he had with his first wife Irene. Francine told me that Gerald and Henrietta signed their shares over to Beatrice (who was left destitute due to Alfred's failure to buy life insurance). But, on a whim, I paid for a title search, and this alleged signing-over was never recorded at the clerk's office! Francine insists that the signed papers must be somewhere in Beatrice's possession. But, as things stand, the signed papers are missing, so Gerald and Henrietta seem perfectly entitled to claim shares in the house.
But that's just one anecdote.
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New and genuine (or genuine-appearing) deeds are fairly uncommon. Full-blown title fraud happens -- this article estimates around 11k cases in 2022 -- but it's pretty rare (<0.0001% risk per year?), and generally more harmful in the sense that it's a ton of lawfare to clean up and out, rather than getting people evicted from their own homes.
((The latter bit is part of why I think anti-title insurance arguments focused on the low loss ratio are misguided. The goal of title insurance isn't to give you the cash value of a house or fence line if someone fucked up paperwork somewhere; it's to handle stuff so you keep your house or fence line unless there's no other less-costly option. That said, a lot of 'title lock' companies are just outright scams.))
That said, the risks are very far from evenly distributed, especially where localities have particularly exploitable practices or taking advantage of national borders and emphasizing areas of quick growth near vacant land.
Weird fuckery and outright mistakes are more common, and obsensibly more of what title insurance is focused around.
The loss ratio for title insurance includes all of the legal and administrative fees necessary to resolve the claim, up to and including straight up reimbursement. So yes, the sevarity of a valid claim is quite high, its just that claims are incredibly rare. I would also point out that compared to most other types of insurance, the overhead for title insurance is very, very low.
I dont think the argument is that title insurance shouldnt exist, its that the price has been spiked by absurb multiples due to effective collusion of the providers and their related industry contacts, and that property buyers are less aware of this price gouging due to the peculiar nature of real estate transactions.
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No. Regardless, you will still have to purchase title insurance for any financed transaction, which is according to the numbers, the biggest scam in the insurance industry.
To save you a click, title insurance has a loss ratio of around 5%, which corresponds to a roughly 20x markup. Contrast this with say fire insurance, which has a 65% loss ratio (ie the insurer expects to pay out 65 cents in claims for every dollar they collect in premiums), automotive of 75%, and homeowners of 82%.
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I'll do @JulianRota one better — I practiced title law for about a decade and I've never seen it. In theory someone could forge the owner's signature on a deed and have it acknowledged by a rogue notary and record the deed, but this doesn't really get you anything. If the property is occupied they'd have to commence an ejectment action to get the owner out, and at this point they'd be found out. If they wanted to mortgage it or sell to a third party they'd run into guardrails the mortgage companies have in place as part of due diligence. For instance, an appraisal requires an in person inspection and the appraiser needs access to the property. The biggest guardrail, though, is that it requires the perpetrator to use his real name and commit a series of felonies that create a massive paper trail.
That being said, I was at a seminar a number of years back and heard that this was a thing in Philadelphia. The caveat, though, is that the forged deeds involved distressed properties in areas that were seeing renewed development interest. And the guy got caught anyway, because when you're selling for enough that it's worth doing, you're creating a massive paper trail. Also, these were properties where the ownership was in question (usually due to an unresolved estate) so the actual owners probably didn't even know they owned the property, or shared it with other heirs. For a normal owner-occupied residence, this kind of thing is near impossible to pull off.
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I've bought and sold several properties in multiple states and am friends with a few realtors. I've never heard of either happening.
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