Council Member Robert E. Cornegy. Image Credit: NY City Council

Proposed legislation would include requirements to provide information about how to respond to suspected deed fraud. On October 13, 2020, the City Council Committee of Housing and Buildings and the Committee on Finance held an oversight hearing examining the City’s deed theft and deed fraud crisis, and discussed two bills and a resolution aimed at combatting deed theft: Int 1913, Int 1919, and Res 1427.

Bills and Resolutions

Int 1913, sponsored by Council Member Adrienne Adams, would amend the City’s administration code by requiring the Sheriff’s Office, the civil law enforcement agency which handles real property actions, to release annual reports on recorded document fraud investigations and complaints.

Int 1919, sponsored by Council Member Daniel Dromm, would require the Department of Finance to provide New Yorkers who believe they have been victims of deed fraud with information about what to do in that situation. This information would include who to contact for assistance, where to file a complaint, and where to report an alleged criminal violation.

In addition to the two proposed bills, Res 1427, sponsored by Council Member Robery E. Cornegy Jr., called on the State Legislature to reform New York State’s notary laws by increasing notary public liability for involvement in deed fraud. The resolution is non-binding but helped frame the discussion regarding how deed fraud occurs and how to increase accountability.

Problems with Deed Fraud

Committee on Housing and Buildings Chair Robert Cornegy began the hearing by providing background on the City’s deed fraud crisis. Chair Cornegy stated that over the past few years, the deed fraud crisis in the City has dramatically worsened, with fraudsters especially targeting the elderly, immigrants, and New Yorkers facing economic crisis. Chair Cornegy also noted that the deed fraud crisis has especially impacted Central and Eastern Brooklyn, Bed-Stuy and Crown Heights, and Southern Queens.

Deed fraudsters use a variety of tactics to get property owners to sign away rights to their homes, such as posing as foreclosure “rescue” companies, offering fake home improvement services and grants for repairs, and even forging a homeowner’s signature, as Chair Cornegy explained.

New York City Sheriff Joseph Fucito testified at the hearing, informing the council members about how the Sheriff’s Office handles deed fraud cases, how the Sheriff’s Office coordinates with the City Register on these matters, and listing a number of ways that New Yorkers can protect themselves from deed fraud.

According to Sheriff Fucito, over the last six years the Sheriff’s Office has arrested 49 suspects in deed fraud cases, with fraudulent transactions totaling over $48 million. The City Register employees are trained to detect fraudulent activity and refer suspicious matters to the Sheriff. A transaction appears suspicious if it contains a quitclaim deed, a sale price far below market value, multiple transfers between LLCs in a short period, or transfers between repeat offenders of deed fraud.

Currently, according to the Sheriff, the City Register records all deeds as long as they are certified by a notary, signed by seller and buyer under certain conditions, and include other required legal documents. While the City Register informs property owners by mail when a deed has been filed against their property, City officials, legal aid attorneys, and community members believe that more efforts need to be taken to prevent deed fraud from occurring.

Sheriff Joseph Fucito educated the public on ways to prevent deed fraud, including:

– Reviewing your property records annually for activity on the City Register’s website.

– Registering for the online Recorded Document Notification Program, in which homeowners receive texts or emails when any activity occurs for their property.

– Check with the City Register if you stop getting any water or utility bills, or if these bills randomly increase.

– If you own an unoccupied property, check on it frequently to make sure it is not illegally occupied. If you are going away for a long period of time, ask someone you trust to check on the property and collect your mail.

– Be wary of organizations that offer you cash for renovations of your home.

– Never turn your deed over to a mortgage assistance company.

– Don’t sign property-related documents that you don’t understand. Consult with a trusted attorney first.

– Don’t use a lawyer recommended by someone with a vested interest in the deal, such as a real estate agent. Fraudsters often operate like a gang, with their own attorney, title company, real estate broker, and notary.

Testimony

At the hearing Manhattan Assistant District Attorney Jill Mariani, senior investigative counsel on the Rackets Bureau, echoed Chair Robert Cornegy’s concerns about the worsening deed fraud crisis in the City, and discussed Resolution 1427, commenting, “the notary public must be viewed as the gatekeeper,” and must be held accountable for their role in deed fraud.

Councilmember Mark Gjonaj suggested that the City should require each party to have an attorney present for any transaction involving deed-related instruments as a way to hold attorneys accountable for their role in preventing deed fraud.

Attorneys from legal aid service organizations commented on the lack of funding for legal services to assist vulnerable New Yorkers that have become victims of deed fraud. Jenny Eisenberg of Legal Services NYC stated, the proposed legislation will be helpful, and “the City Register’s notices (that there has been activity on a person’s property) are great, but once homeowners are notified, then what? Then you need an attorney.”

Members of the public commented on the connection between the City’s tax lien sale and deed fraud, explaining that homeowners become targets for deed fraudsters when their information is published for lien sales. Targets are followed to work, to the grocery store, and are aggressively harassed about selling their homes.

Richard Flateau, a real estate broker, former Chair of a real estate board, and Chair of Brooklyn Community Board 3, spoke about how he was recently a victim of property fraud when a criminal impersonated a notary by stealing a notary’s stamp. As Chair Robert Cornegy stated, if a seasoned real estate expert can fall victim to deed fraud, anyone can.

By: Victoria Agosta (Victoria is the CityLaw intern and a New York Law School student, Class of 2022.)