By: Mark G. Deering, CFP®
If you’ve been around on the internet lately, you’ve probably read an article, seen an advertisement, or heard about something called “home title lock,” also known as home title insurance. If you’re like most people, you likely saw this and wondered, “What is home title lock, and should I buy it?” Keep reading to learn what home title lock insurance is, how it does or does not protect you, and whether it’s something you should investigate further.
What is home title lock?
Home title lock, home title insurance, or home title monitoring services are advertised as provided by a third party to help homeowners prevent, identify, or correct a fraudulent conveyance of the ownership of their home. One of the most common ways that thieves will gain access to your home title is by filing a quitclaim deed with the county you live in to transfer the property into their name. The title thieves then subsequently use the property as collateral to open a home equity line of credit or traditional mortgage which provides them with funds they can then funnel into their own pockets.
What is home title fraud?
Home title fraud is an infrequent but growing area of crime in the United States. It was first noted by the Federal Bureau of Investigation in 2008 and began in large cities across the United States. There are no exact statistics on how common the crime is today, but there are certain properties and people groups that have been shown to be more susceptible to home title fraud, such as:
- Properties that are fully paid for with no existing liens
- Elders and unsuspecting homeowners
- Vacation properties due to the homeowner not being present and noticing some of the signs of home title fraud when it occurs
Is home title lock different from title insurance?
Yes, and it’s important to make a distinction between the two. Title insurance is purchased when a home is acquired to protect either the owner or the lender from valid claims against the home that are unknown at the time of purchase. Home title lock is focused exclusively on protecting the homeowner from fraudulent transfers. Title insurance is commonly recommended in the United States and is paid in a lump sum at the purchase of your home and lasts for the duration of your home ownership.
How does home title lock protect you from title fraud?
Although home title protection may include the word insurance, it is a bit of a misnomer. In rare instances does home title lock actually provide insurance. In almost all cases, it is a combination of two services, the first being a monitoring service and the second being a support service.
The home title lock provider will monitor your deed with the county assessor for the property that you are protecting. They will notify you of any paperwork or liens or changes to your title that are affected, which allows you to identify if any third parties are acting upon your property. After you have been alerted by the title lock service, you’re then in a better position to prevent subsequent title fraud or to recover your title if it has already been transferred. The title lock service usually provides support if the deed has been fraudulently conveyed in the form of guidance and help. They do not however, insure you if your home is fraudulently transferred.
So, should I buy home title lock?
Although home title lock or home title insurance is relatively affordable at usually $15 to $20 a month or less than $250 a year, buying title lock insurance may not be necessary for a lot of people. Why? Because the first part of the home title insurance can now often be provided for free by your property assessor. Many property assessors are now offering the ability to create online alerts for your title and property. This provides the first half of the home title service for free and directly from the property assessor’s records, allowing it to be just as accurate, if not more accurate, than the third-party service.
The second thing to consider is that if you are a victim of home title fraud, you’re a victim of just that – fraud! You will not be evicted from your home and if, for some reason, the thief who has stolen your title takes out a mortgage, you would not be required to pay it, as it was not you who took out the mortgage and they did not have a valid claim to your property. While there may be legal costs and work involved, you will not be losing your home due to home title fraud.
Please keep in mind that each person’s situation is different. If your properties do not provide the option for an alert from the county assessor’s website, if you have multiple properties, or if you’re concerned about the property of an elderly family member, home title lock insurance may make sense. If you have any questions about the information in this blog or to have a conversation about whether or not this makes sense for your specific financial situation, please reach out to the team at Southwestern Investment Group.
Links for Property Assessor Sites & Fraud Alert Registration by County:
Davidson County – click here for direct registration link
Rutherford County – click here for direct registration link
Sumner County – click here for direct registration link
Wilson County – click here for direct registration link
Williamson County – click here for direct registration link
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Mark G. Deering, CFP®, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
