Many of you have probably seen recent advertisements by companies warning you that criminals can forge documents and otherwise misrepresent themselves as being you, after which they either take a loan, or sell your property and run off with the proceeds leaving your property subject to financial encumbrances you did not authorize and even foreclosure. While, in order to sell their services, advertisers tend to exaggerate the frequency and likelihood of such an event, it is a real-world problem.
Let me provide you with an example from a case we recently resolved at Black & Wadhams. A Black & Wadhams client (“Mister X”), like many of our clients, held title to his real property in a limited liability company, and lives out of state. Mr. X received a letter from a Las Vegas title company thanking him for engaging their services. Having not even heard of the title company, and certainly not having hired them, Mister X immediately researched his LLC information on the Secretary of State’s website and saw that someone had filed amended limited liability documents with the Nevada Secretary of State, naming themselves as the Manager of Mr. X’s LLC. Upon further investigation, the Mr. X discovered that his property had been sold and title had already passed to a buyer of whom he had no knowledge.
Unfortunately for Mr. X, it was too late to take proactive measures to prevent the fraudulent sale, and we are assisting him in a suit that now involves multiple parties including the fraudster, the title company, the would-be buyer and others. Black & Wadhams could have likely prevented the troublesome and costly event by using a relatively easy and inexpensive process. It assures that loans cannot be obtained and title cannot be transferred on your property without you first receiving notice. Moreover, it is a one-time expense, allowing you to avoid subscribing to one of the “monitoring” companies that charge monthly fees in perpetuity.
As a preventative measure, we advise our clients to create their own encumbrance on their real property by making a “loan” of a nominal amount to the entity in which you hold title and securing it against the LLC property. This can be done with any property as long as you are the owner and irrespective of whether or not the real property is held by an LLC or an individual. Our clients create a Promissory Note to reflect the loan and, more importantly, create and record a Deed of Trust with the County Recorder’s office. The Deed of Trust , is an encumbrance or “cloud” on title which serves as your protection Because the Deed of Trust must be addressed before title could be transferred or an additional loan issued, the title company or lender will necessarily contact you before selling or closing a sale transaction on your real property, Thus, you would not only have notice that someone is attempting to fraudulently sell your real property.
There are of course additional legal and financial considerations, but you get the point. Make your property less attractive to a fraudster by recording additional Deeds of Trust and ensuring your notice if your real property has been targeted.
Black & Wadhams would be happy to assist you to secure one or multiple properties, allowing you to rest assured that you will not end up like Mr. X.