Title Lock Insurance: How to protect yourself for free

We’ve all seen the television ads talking about home title lock insurance. They make is sound like title theft is likely to happen to you tomorrow, and the only way to protect yourself is to send them money. But real estate expert John Adams is taking a closer look at what actually the service actually provides.

Adams says Title Lock is a clever combination of terms that sound important, but that present no threat to the vast, majority of American homeowners.

Promoters want you to believe that Title Lock is similar to title insurance, but Adams says the two are nothing alike.

Title insurance is a one-time purchase that protects you or your heirs against any claim against the validity of your ownership prior to the date you bought your house. And that's something he always strongly recommends that every buyer purchase this coverage.  But this title lock is totally different.

Title Lock claims to protect you against title fraud, which by definition is not a legitimate claim.

Under title fraud, a scammer forges your name on a deed, then files it in the records room of your county courthouse, then takes out a loan, using the home as collateral.

It can happen, but it's a very rare scam right now.

In that case, you still own your home. The new scam owner obtained their claim to ownership by a fraudulent deed. They would have to prove that your signature on that deed is valid and that you signed it. And the fact is that you didn’t.

The technical term for what happened is forgery in the first degree and shall be punished by imprisonment for not less than 1 nor more than 10 years.

And since the scammer never legally owned your house, the lender has no legal claim on your property. If they tried to foreclose, that would be considered "wrongful foreclosure."

In an ironic twist, the lender probably required the scam borrower to pay for lender's title insurance to protect the lender against fraud just like this. The title insurance company would probably have to eat the loss, then try to recover against the scam borrower.

So, if you buy Title Lock insurance, you may think that would protect you against that scam, but Adams says it doesn't.

First, it’s important to know that Title Lock is not insurance of any kind.  It does not protect you in any way from a scammer fraudulently transferring your title.

Instead, Title Lock is a deed monitoring service that periodically checks to see if title has been transferred out of your name. If it has, they notify you after it happened. They offer no assistance in solving any problems that may be created.

Second, you can’t lock a title in Georgia or any other state Adams has looked at. Anybody with a pen and paper can fill out a blank deed and forge your name to it, then file that deed at the courthouse.

If that happens, the law assumes you will act eventually to protect your ownership, and charge the scammer with fraud.

So how do you find out that this scam happened? A pretty good indication would be when someone knocks on your door and says they are the owner of your house and you must leave. At that point, you would call your attorney and justice would (eventually) prevail.

It'd be expensive, but it is much less expensive than losing ownership of your house to a scammer.

Adams says the important thing to know is that the service, which costs about $15 a month, is not a lock nor is it insurance. It is a periodic monitoring service that offers you no assistance whatsoever if someone uses forgery to try to steal your title.

In most counties, you can access the county property ownership records online free of charge and check for yourself. In my opinion, it is simply a totally unnecessary expense.

The bottom line is companies that offer Title Lock services are fueling, then preying on fears that someone is going to "steal" their home from them. The reality is that attempted title theft is quite rare, and is always unsuccessful, provided the true owner keeps an eye on his or her property.