{"id":603,"date":"2019-03-11T06:00:43","date_gmt":"2019-03-11T10:00:43","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=603"},"modified":"2024-04-25T23:21:06","modified_gmt":"2024-04-26T03:21:06","slug":"the-quitclaim-deed-and-fraudulent-real-estate-transactions","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/the-quitclaim-deed-and-fraudulent-real-estate-transactions\/","title":{"rendered":"The Quitclaim Deed and Fraudulent Real Estate Transactions"},"content":{"rendered":"\n
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Quitclaim deeds<\/a> show up commonly in fraudulent real estate transactions. This type of deed fraud can impact elderly people, buyers purchasing real estate from strangers without warranty, renters who are paying someone who is not a legitimate owner, and anyone involved who might buy, sell, or own property.<\/p>\n\n\n\n

Here, we\nexamine how it happens and how to detect it.<\/p>\n\n\n\n\n\n\n\n

The\nQuitclaim Deed: Its Legitimate Purpose<\/h2>\n\n\n\n

A quitclaim\ndeed transfers one party\u2019s interest in a property to another party. Quitclaims\nare common in transfers of homes from parents to children, from sibling to\nsibling, or between divorcing spouses. These are the simplest scenarios for the\nquitclaim deed\u2014occasions for giving property, not selling it.<\/p>\n\n\n\n

Yet\nsometimes quitclaim deeds arise in tax sales. The taxing entity sells a\nproperty to recover the value of its unpaid taxes. The government then conveys\nto a buyer the interest it gained through foreclosure\u2014nothing more.<\/p>\n\n\n\n

Any buyer\naccepting a quitclaim deed without warranty should understand that the\ntitle could have defects.<\/p>\n\n\n\n

Conversely,\nthe quitclaim is a \u201cdeed of release\u201d if there are ambiguities to clear up. A\nparty who potentially could have a claim can use the deed to resolve the\npossible cloud on title, leaving the property free and clear to its concerned\nowner.<\/p>\n\n\n\n

The\nUse of Quitclaim Deeds in Scams<\/h2>\n\n\n\n

Unlike the warranty deed<\/a>, the quitclaim\nrequires no title examination process. There is no guarantee of clear title.\nThus, scammers are drawn to quitclaim deeds to carry out transactions with\nassets that belong to other people.<\/p>\n\n\n\n

Scammers may\nexploit the simplicity of quitclaim deeds. They may use these instruments\nto fraudulently convey property into their names or aliases. Some pose\nas personal representatives of estates to carry out the schemes.<\/p>\n\n\n\n

Having\nrecorded a fraudulent document, a scammer can sell the property without a\nwarranty, rent it out to unsuspecting tenants, or obtain a loan on its\nvalue.<\/p>\n\n\n\n

Today,\nonline sources offer scammers ample information about properties and their\nowners\u2019 identities to facilitate such activity. Moreover, it is not difficult\nfor a fraudster to go into a county courthouse and file a quitclaim deed behind\nthe rightful owner\u2019s back.<\/p>\n\n\n\n

Typically,\nunder state law, a recorder of deeds lacks authority to review or deny\nrecordation\u2014even if something looks suspicious.<\/p>\n\n\n\n

Thus, a\nfraudster with a quitclaim deed can quietly take away a rightful owner\u2019s\nproperty. Often, the victim\u2019s loss only becomes apparent much later, when an\neffort to sell the property hits a wall during the title examination. An\ninnocent person then faces a lengthy, expensive legal action to set the\nill-gotten deed aside and reestablish ownership of the property.  <\/p>\n\n\n\n

Elderly\nTargets<\/h2>\n\n\n\n

The\nelderly are often targets. Sometimes, the perpetrator is someone they\nknow.<\/p>\n\n\n\n

Caregivers,\nfinancial advisors, or family members could persuade the owner that\nsigning over a deed makes financial sense. Sometimes, coercion or threats are\nused.<\/p>\n\n\n\n

In other\ncases, someone fakes the elderly homeowner\u2019s signature and has the document\nnotarized.<\/p>\n\n\n\n

Sometimes\nthe fraud is more complex. Fraudsters may ascertain that an elderly person\nfailed to make tax payments. The scheme involves paying part of the tax debt to\nstop the home from foreclosing, then filing a lien on the property. Some\nuse quitclaim deeds to transfer the title.<\/p>\n\n\n\n

Other\nfraudulent practices involve locating elderly people\u2019s vacant homes or beach\nhomes, exploiting the owners\u2019 long absences to get away with using quitclaim\ndeeds to transfer titles.<\/p>\n\n\n\n

New\nSystems<\/h2>\n\n\n\n

Some county\ncourt officials are developing new systems intended to prevent deed fraud\nschemes and to protect or warn victims.<\/p>\n\n\n\n

For example,\nCook County, Illinois has been working on a pilot blockchain\ntitle plan<\/a>. Blockchain is an electronic ledger that can record an accurate\ntitle, and from there on etch into the block every subsequent transaction in\nreal time, so that fraud is flagged immediately. Should this experiment lead to\na widespread practice, a process once vulnerable to scams will become\nfraud-proof.<\/p>\n\n\n\n

Meanwhile,\ncounties are taking steps to address the rise in fraud.<\/p>\n\n\n\n