The following fact situation is true, except for the names of the parties involved and the city. This is a continuation of a series of articles Statewide Title has instituted to bring actual problem areas to its customers of claims or potential claim situations that have actually occurred in the industry as a part of our education on claims reduction.
Joe Homeowner was a professor at a local university in Carolina City. He decided to take a sabbatical from teaching and go to Europe for two years to live and teach at a university there in a teaching exchange program. Since his wife, Sally, was going to accompany him they decided to see if they could lease their house for the two years they would be gone. They listed their house with a local realtor who promised to find them a tenant who would take care of their home while they were away. In short order, the realtor made good on her promise and found the perfect tenant, someone new to the community who was looking to rent for a couple of years and then buy a home. A lease agreement was executed and recorded, so Joe and Sally Homeowner packed their bags and departed for Europe.
The two years seemed to go by quickly. Joe and Sally returned to Carolina City after his teaching obligation was completed. When they returned to their home they were surprised to find someone was living there. They were more surprised to find that the person living in their home claimed to be the owner and had been living there for almost the entire two year period they had been away. The new owner, Ted New Buyer, even produced a deed with his name on it as grantee. The seller on the deed was none other than Tom Tenant, whom the Homeowners had leased to a little more than two years earlier. Joe and Sally made an appointment to see their attorney, who promised to look into things and did so by examining title to their property. What he discovered was that, within a few days of Tom Tenant signing the lease for their property, a deed was placed on record from Joe and Sally Homeowner conveying their house to Tom Tenant. Tom Tenant, in turn, sold the house to New Buyer.
Investigating the matter further, their attorney discovered that Tenant had told the neighbors that he had bought the house from Joe and Sally and had moved to Carolina City on a job transfer, but that the job he had been promised had not materialized as promised. He was, therefore, forced to sell the home he had just bought below market value since he no longer had a job. Because of the story they had been told, the neighbors were not suspicious of the turnover in occupancy in the house.
Tenant was nowhere to be found. New Buyer had put several thousand dollars out of his savings as down payment toward the purchase with the remainder financed with a mortgage by First Carolina City Bank. New Buyer and the Bank had title insurance policies. Since the deed was forged, the title company reimbursed New Buyer and the Bank for their losses, and the home was returned to Joe and Sally Homeowners.
Was there anything the closing attorney for New Buyer could have done to have prevented this problem from happening? Two things come to mind. First, it should have raised the title examiner’s suspicion that a deed involving the same parties was placed on record so soon after the lease had been recorded. Second, in comparing the signatures of Homeowners on the lease to their signatures on the deed it was obvious they were not signed by the same parties. So many times when fraud is involved there are apparent clues on the record that will tip off an astute title examiner to look deeper.