Is Title Theft Insurance a Scam?

Have you heard about title theft? This is a type of identity theft in which a scammer forges documents or impersonates you so they can transfer the deed to your property under their name. Once they have possession of your deed, they can take out loans against the property or even try to sell it for a profit. An FBI report published in 2022 stated that nearly 12,000 individuals had been affected and that they had lost a combined $350 million due to title theft.

We know title theft sounds bad, and it is. You may be concerned and wondering what you can do to protect yourself. A number of companies have come forward to offer comfort and safety in the form of “Title Theft Insurance.” This insurance can cost $100 or more annually and claims to notify you about any activity related to your deed and prevent unauthorized title transfers. Is this insurance worth the cost? Does it provide the protection it claims to provide? Is it just another type of scam?

Read on to learn the real deal about title theft insurance from the real estate experts at World Wide Land Transfer.

Although title theft is a genuine issue that you should be concerned about, title theft insurance is not really necessary. When title theft happens, the deed is considered forged and invalid. If a scammer tries to transfer your title to themselves or sell the property to a third party, the sale or transfer will never be considered legally valid. You may need to pay some attorney and court fees, but the risk of losing your house is basically zero. The scammer is unlikely to show up in court to defend their fraudulent ownership rights; they will probably just move on to an easier target. In addition, any buyer or lender who is involved in a fraudulent transaction involving a forged deed will be legally responsible for any financial losses, not you as the rightful homeowner.

You should also know that multiple safeguards are already in place to prevent title theft. Credit reports, income tax return verification, and photo identification requirements can all stop a scammer in their tracks before a title is ever transferred. In some cities like Philadelphia, where title theft is running rampant, they have even created title theft task forces to investigate additional safeguards that can be put in place. Title insurance companies like World Wide Land Transfer also play a crucial role in preventing title theft. Any lender will conduct a title search before lending money for a real estate transaction, and an experienced title agent will easily be able to identify an attempted title theft.

If, by some unlikely set of circumstances, a scammer manages to bypass all those safeguards, an enhanced owner’s title insurance policy will protect you against fraud and forgery, paying any legal fees resulting from an attempted title theft. While a standard owner’s title policy provides coverage for fraud and forgery that occurred in the past, an enhanced owner’s title policy can cover you for post-policy forgery and a range of other title defects that aren’t included in a standard policy. The stolen deed crisis, or title theft has been rampant for a while now. It’s a tremendous value, and it only costs 10% more than a standard policy.  In fact 5 years ago, Marc Shaw sat down with the PLTA to discuss the stolen deed crisis….. here is the video from then. 

If you are concerned about title theft, don’t pay for title theft insurance! An enhanced owner’s title policy will provide all the same protections and many more for a one-time premium that covers you for the entire time you own your home. It can even cover your heirs if you pass your home on to them. A title theft insurance policy can’t make any of those claims.

Get in touch with World Wide Land Transfer to learn more about title insurance in Philadelphia, PA, and communities all across America. You can protect yourself from title theft, and our experienced title agents can help you.