REAL ESTATE
Do I Really Own It ?
As discussed in Chapter 7 of our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology, and several previous Real Estate blogs, the purchase of a home may be one of the biggest decisions, and investments, to make in one’s lifetime. It has never been more difficult for first time buyers, which are usually in their late 20’s to early 30’s, to purchase a home, and the process can be very harrowing and nerve-wracking. Investment properties have now become very challenging as well, with potential “rent freezes” and new system regulations, and increases in insurance and property taxes.
Our focus in this blog is to discuss a few of the much lesser-known dangers and risks of “owning” real estate that is at least partially controlled by a financial or government entity, beyond the commonly understood default for non-payment of one’s mortgage loan.
Historically, pre-internet and digital age, real estate ownership (as well as some other personal property) was certified through physical documents and recorded in official locations, with a copy also provided to the buyer/owner.
Today, with the transition of these documents, accounts, and banking transactions to electronic means, additional inherent risks have been created. Some of these risks are generally known, including security breaches regarding personal information (“hacking”), credit card fraud, and the potential for “freezes” to be placed on accounts without warning.
In the real estate industry, there are a few “under the radar” deceptive practices that could affect one’s actual rights and ownership to their legally owned and purchased asset, including the following…
Tax Liens – When a homeowner gets behind in their property taxes due to the local government tax assessment entity (city, town, county, etc.), they have a limited time to bring the account up to date, before they are considered “in default,” regardless of whether the mortgage payments are current. Once in default, the taxing entity has the right to publicly sell the “tax debt” at public auction to anyone who wishes to “invest” in the lien. Though the property owner will generally have 1 year to redeem the property, they will be forced to pay the investor an interest fee (usually 10-12%). For those who may struggle to bring the account to date, this adds an additional fee to a party that was not involved in the original transaction. There are many “how-to” programs out there that teach potential investors this process and it is LEGAL.
Title Theft – The onset of digital and online record keeping (pushed by many financial institutions) has also resulted in the little-known ability to “steal” a homeowner’s title right out from under them. This process, known as “deed theft” and/or “mortgage fraud,” occurs when the “thief” forges the owner’s signature on the deed and simply files it with the county clerk. Thus, it appears the owner signed the property over to the “thief,” which can result in sale of the property, re-financing, and borrowing from the equity. Keep an eye out for any unusual activity regarding a mortgage loan and/or credit card charges. There are companies that handle this type of fraud that can be utilized to secure your title.
Creditor Corruption – Maybe the biggest “unknown” source of corruption regarding home ownership, is the financial institution itself. There is a little-known practice in which lenders engage where your property can actually be used as “collateral” beyond the secured mortgage loan for that property. In this instance, the purchaser believes the asset is their own, as it was legally obtained through normal processes. However, what is unknown is the fact that the lender may use the property (and potentially others) to another debtor who secures their “assets” with larger loans. That lender then has control over your lender, and may have the legal right to confiscate your asset to satisfy any defaults. The same concept can also be true for other assets. Please review our recent Did You Know – You May Not Own It blog, dated 12-9-24 for further details.
Eminent Domain – Do you live right near an airport, conservation area, or other government owned land? If so, you may be at risk of the local or federal government confiscating your property for “official use,” whether that be expansion, new regulations, or almost any other “lawful” reason they choose. Although there will usually be an “offer” to buy your property, usually a lower than fair value price, it can inevitably result in a takeover. Taking the case to court may delay the activity, however would be extremely costly for the property owner.
Immoral Investors – Also beware of any investor (often realtors) who offer to become co-owners with you, should you be at risk of losing your home. They may offer to purchase and rent/lease back to you, or simply “share” in the ownership. These contracts can be very confusing and deceptive, with clauses that relinquish “control” over the property, granting the investor the right to remove you from the property, similar to a financial institution.
As we have mentioned in the past, consider every option, including family assistance, before agreeing to partnerships with anyone attempting to earn a share of your property.
Please visit the website www.augustassociatesllc.com for home values, listings, and professional assistance.
