Deed Theft in Michigan: Do I need protection?

I recently heard a radio advertisement for a company that sells a product which ostensibly protects your home from “deed theft”, “title fraud”, or “house stealing”.   According to the company, deed theft or title theft is big business.  They explain it as a variant of identity theft.  The thief assumes your identity and then files documents with the County’s Register of Deeds transferring ownership of your home to themselves or a third party.  They or the third party then sell the home or mortgage, keeping the proceeds.  “Thieves simply change ownership of your home from YOU to THEM.  Then they TAKE OUT LOANS on your home and just disappear.  Leaving You with the payments and a mountain of legal bills.”  For a mere $14.98 a month (or two years for $298) the company will “monitor your home’s deed 24/7 to prevent title fraud.”   The company is vague on what it actually does to protect your title, other than notify you if there is a deed or mortgage recorded regarding your property.   

Initially, let’s get one thing straight.  No one can legally transfer title to your home but you, the true owner.   A deed or mortgage to your home signed by anyone but the owner is not only voidable, it is void.   It is of no force or effect and it does not matter that the new buyer or mortgagee was unaware of the forgery.  They received exactly what their grantor or mortgagor had: no title.   

Additionally, a purchaser or mortgagor acquiring property or a lien through a forged deed or mortgage is not a bona fide purchaser or mortgagee for value.  They essentially have no title or mortgage, and may not enforce their interests against your or your property.  A bank relying upon a mortgage with a forged signature has no mortgage.

Anytime a deed or mortgage is executed, the signature of the grantor or mortgagor must be notarized.  Prior to notarization, the notary typically verifies, through examining the persons driver’s license or other personal identification documents, that the person signing the document is who they claim to be.   If the notary is doing his or her job (and most are very conscientious) the chances of fraud are minimal.

In Michigan, purposely clouding someone’s title by recording false documents is an actionable civil offense.  It is also most likely a criminal offense.  If you can find the person who did it, you can hold them responsible for your damages and your attorney’s fees. 

Finally, most buyers and certainly most lenders procure title insurance as part of any purchase or loan.  If they have relied upon a forged document in buying the property or extending the loan, typically their title insurance underwriter will address this situation and make them whole.  This is one reason why title insurance is purchased.

While a forged instrument is void, that alone doesn’t remove it from your chain of title.  You may need to follow up with a quiet title action or some other curative steps which typically involve engaging a lawyer.  While that will result in some cost, I don’t see the product which is being marketed as covering this cost.  After they have notified you of the fraudulently recorded document, their job is done.

Bottom line, I think this particular product is of little or no value and should not be purchased.  Save your money.

This post was written by my colleague Robert Parker.  For further reading, see this article by Kiplinger.