Title Pirates
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This is our glass with this american life. Each week on our show, we use a theme, different stories on that theme, just going to stop right there. You are sending to an npr podcast, chances are, you know or so.

So instead i'm going to tell you, we've just been on a run of really good shows lately, some big epic motion stories and some weird, funny stuff too. Then what is this american life? This is planet money from npr.

Genolio is a real estate development. SHE bites properties, build houses on them, sells them. And she's pretty hands off about all the paperwork. SHE has her lawyer handle that stuff.

The lawyer comes, I give him the money and he will close and he will call me and say, it's closed to yours.

So impersonal.

yeah. IT is i've never met any of the sellers of the properties we have bought.

Gina and her business partner have bought eight properties in connect cut where they live. And then two years ago.

SHE found her nth. A reeler came to us and said, there is a piece of land for sale. It's been in the same family for many years.

Did you go see the property?

So I drove by, but that was just an overgrown lot at the time.

an overgrown lot now, even though she's pretty hands off. Every time gina buys property, SHE does her do diligence, like, is the land flat? Are there any wet lands? SHE and her partner, look at zoning boundaries, that kind of thing. And of course, with this new property, SHE checked out the owner. He wanted to have an idea who he was doing business with.

It's more at curiosity than anything. But obviously, if you found out, you know, the person was, I don't know, a gangs sters. And I don't know if I want to buy a property from them.

So silly things like that. And when I googled, I found the name, none, the documents, the correcter dress was there. He seemed like a Normal man, and everything seemed fine. And that was IT.

So they do all the paperwork, use their real estate agent in attorney. They close the deal the way they always do, totally virtual. They paid three hundred fifty thousand dollars and got to work building a very nice house. What kind of .

investment are we talking about?

I think we were. We were already over eight hundred thousand dollars or something like that into the house.

okay? That's a lot of money.

We just had put the windows in all the mechanical, meaning electric plumbing was all done, and the house was insulated.

Oh, wow. They already had buyers lined up, this nick Young couple and gina as the work was getting done when on vacation to turkey, where SHE got a phone call from her lawyer.

And by the tone of his voice, I knew something happened with the house. And my first .

fear .

was I thought the house burned down.

okay. The house had not burn down is actually something that was maybe worse.

Our lawyer told us that the person that sold the property to us um was not the owner. This was a fragile and sale. The the real owner never sold this property and was unaware that the property was sold. You're right away, you think, well, how can this happen?

Hello and welcome to planet mute amErica barriers .

and i'm jeff glow property. Can we buy IT? We sell IT seems so secure. All that money, all that paperwork, all the doted lines design and so many people checking to make sure that IT is all air tight.

But there's this one part of that system that is a bit more hodge podge than you'd really want you to be the way we track who owns a property, who has a title to IT. And there's a whole new canvas in trying to exploit that system today on the show the wild world of title insurance, where propriety land ownership maps disconnected registry systems, the tragic loss of historic apple trees and title parents.

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Big news stories don't always break on your schedule, but with the M P R APP news culture and podcast already, when you want them in your pocket, download the M P R APP today. So jima edu had paid three hundred and fifty thousand dollars for a piece of land. Then SHE spent nearly a million dollars constructing a brand new house on that piece of land.

And now he had got an iphone call that the person SHE had bought that lot from was not actually the owner. SHE and her business partner had to stop construction of the house. Technically, they were trust passing.

I was very nervous. I was scared at a very sick feeling in my stomach. I just kept saying, so what what happens now?

And we're just going to pause you a story here because we need to tell you a story about the same parcel of land from another perspective.

Now, this other story is about a guy named Daniel g. Nowadays he is a super successful doctor. But way back in one nine hundred and fifty three, he was just a baby. And in those post world war two suburban boomy ers, his dad built a house in a connective suburb where Daniel and his brother is grew up.

We were all kind of running in and out of each other other's houses across the loans. The dogs were running free. We were playing baseball on the street and so forth.

Very idea.

IT was very a delic. That's really what IT was like.

Daniel dad also bought a half acre or lot next door to their home. IT was full of grasses and critters and some struggling trees from when this new suburb had once been a fruit orchard.

There was an apple tree on this land, which still had, you know, was still producing apples. And we had our tree ford in this apple tree.

so they had a tree fort, but that's pretty much all they ever did with that lot.

Daniel grew up in this lovely house with this huge yard next door. And that apple tree. Eventually he moved to new york, started to practice as a doctor.

And then around fifteen years ago, after his parents and brothers had died, he inherited the family home. Eventually, he sold the home, but he kept the vacant lot next door, pay taxes on IT. And he regularly fielded offers.

Couple times a year, somebody would call me up about this land, usually wanting .

to buy IT.

And what did you say? No, sometimes ever asked how much, but if I wanted to solve the land, that would have put the land on the market.

even though the property was twenty five miles from more. Daniel lived on long island. IT was a tie to his hometown and and asked, he figured he'd leave to his kids plus. And then he says, the lot was like this mini forest, a whole ecosystem had grown.

I just look like this patch of woods in the middle in.

And then one day, two years ago, he was on the phone with a childhood friend in .

the course of this phone called, said, by the way, I I noticed that they're building a house next year old house, finally, after all these years.

a house and Daniel lot and I said.

well, that's that's like pretty crazy because I own that land and I never sold IT anybody.

Daniel had to go see for himself.

I just took at five o'clock ferry or whatever.

IT was that two can.

Oh yeah.

that very good. OK, yes, that's now. So I just .

popped on the ferry and drove through the old neighbourhood, saw this house.

So there was a house there.

there was a house that was almost completely built. And the land that IT was on, which, you know, that might seen, that had been a dense forest, was completely like coch earth.

That dense forest, Daniel described, that was now scorched earth, that the property gene eade had purchased the quote on, quote, overgrown lots. Gina and Daniel may have different ways of describing the property, but they were both plum ics.

There was just so many questions that just could even be answered at that point.

How could this happen? That's my land. how? how? How did we get to this reality?

Yeah, how did this happen? How did gina seemingly buy a property that Daniel seemingly still owned?

To answer some of gina and aniello questions, I called steward stuck. He goes by.

Steve teaches .

at cardozo law school. His specialty is property and land use. Our first question was, before poor gina, with her half finished house, bought that property, couldn't SHE have just looked at some kind of big map of the united states to see who owns what?

The answer to that is, no. We in the in the united states don't have a system where you can go up and look at an official owner particular property. Instead, we just have a registry recording system in which any time there's a transfer, the transfer is recorded.

So instead of a national mater list that says this plot of land is owned by jeff, that plot of land is owned by eric, and so on and so on, all the records that actually exist are just records of real estate transactions. That play was sold in one thousand nine hundred eighty four to someone named judy, and before that, I was sold in one thousand nine and seventy to darleen and bob, who inherited ted IT from Harry. And before that I was sold to what else you get the idea every township or borrow or county might have their own registry of those types of transactions.

but those registries are not, uh, any certification of ownership. There is just an ability to look at deeds to particular parcels of land.

In fact, that's what indeed really is. Having a deed to a piece of land doesn't prove that you own IT IT just proves that you got the land from somebody else at some point in time.

And all towns and colonies keep track of these transactions differently. And one time you physically go to a building and look through big eo papers somewhere else, you might be able to search the records online on your phone. And all those different systems of registering land transactions, they're not really communicating with each other. There is no cohesive system.

And you know, technically, a regular person could piece together all this information themselves.

Like, can any of us do IT?

It's not as easy as IT sounds. It's not as if you look up your party of land and see who owns IT. What you have to do is look to see, alright, when did my seller require title? From whom did that person acquire title from somebody else? Maybe there was a death.

And you have to look at property records. You have to make sure that there are no outstanding mortgages. And that's a lot of searching. It's a lot of work for person to do.

And all this stuff is really high stakes like there's a partial owner to the property that person make him knocking on your door and they're gonna have rights. Or if a seller actually took alone out on that property, they told you and they never paid IT off that bank is gonna can find you. Or the lot you partied for your community garden actually has years of unpaid taxes on IT. That's you know.

So essentially in the united states, the only way to know who really owns what is two piece together, a bunch of receipts. And all of those receipts are held in different places that are organized ing them differently. And if you don't have complete information about the property you're buying, there can be huge consequences.

This seems like a little bit of a uh for a lack of a Better word, a jenky system. What you just described well .

IT is to sm extent but it's a system that we've had for a couple hundred years.

This is a very american problem. A bunch of decentralized systems that are kind of messy and IT creates a bunch of risk for anyone trying to buy a property. But there is also a very american fix for this problem, a market solution, title insurance.

Title insurance, it's called insurance, but IT Operates more like a warranty. The fee you pay to a company when you close on a property, they're supposed to guarantee that the title to the property you just bought is clean, meaning they're unpaid taxes or loans on IT that you're buying IT from the one hundred percent real owner we've ever bought a house IT is most likely that you also bought a title insurance policy landers require them.

And these companies, there are only like four of them in the whole country, have these separately maintained, comprehensive, highly efficient proprietary records of land ownership called title plants, their own system. And when someone buys title insurance on a property, the company looks in those records maybe takes them like a couple hours since they already have the information on hand. So once they've compiled those super secret records, title insurances of very good business.

they done all the work.

right, right, right? They've done.

There's no more, right? So anything they can get out of the order is basically gravy.

And what they can get out of the commoner is significant. Up to two percent of the cost of a property for a couple hours of work. But home owners pay IT because it's often required and because that fee, it's just one more closing cost in the midst of a huge purchase with a ton of paperwork and all kinds of fees. So people stomach IT .

and it's in the company's best interest to do a good job because if something goes wrong, they are on the hook. When genolio and her business partner purchased that overgrown what in connect cut, they paid for title insurance. And when SHE learned that I had been a fraudulent sale, her lawyer had the answer.

Our lawyer was extremely good at keeping my husband and I calm and said, you know, we're going to find a solution. Don't worry. And at the end of the day, you have title insurance.

Gina and her partner had three hundred empty d thousand dollars of title insurance on the property, so her lawyer told her, no matter what, he would get back that three hundred and fifty ty thousand dollars.

However, we had a house on that land.

a nearly million dollar house.

and all of the land clearly belong to the men who owned the property, who did not sell the property, who who did the house belong to.

and how did the land get? So if apple tree Daniel didn't sell IT, that's after the break.

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referred from a real estate agent. Hey, can you represent this guy? He's selling some property that he inherited in, by the way, he's an expatriate.

an expat.

Anthony actually does hundreds of real estate transactions a year, and he regularly works with overseas clients.

Means you just do a google sort on your clients or anything.

Usually we don't. But that is now one of the practices that uh, that we teach now.

including me. So Anthony y starts talking to his new client, a guy who calls himself Daniel Daniel can burk, but who apparently lives in south africa.

The .

one yeah, there was the country code was south african country code.

He says they had all the typical conversations. He got a scan copy of Daniel passport emailed back and forth with him. Daniel filled out all the paper work, and he asked for.

was there anything that seems like suspicious or different or whatever?

I didn't really raise a hair.

And before the closing, the title insurance company .

did its big um and so .

what they fine, they found that a gentleman by the name of Daniel Kenny burg owned this piece of property and that is what we expected.

And so you closed .

and we closed.

Gina and her partner gave Anthony a bank check and he wired the total cost for the land to a well spargo bank account. Anthony took his fee and he moved on with his life.

Several months later, I had received the call from another local attorney who said, hey, remember that closing? You did. Yeah, china, well, that was not real.

IT was a fragile ent situation. And the person who was selling the property wasn't who they claim today. And the real owner had his landsturm, basically. And I said, wow.

this guy, Anthony y had been talking too well along. He might have guest was not our Daniel. He wasn't apple tree Daniel. This guy was a fake Daniel, who found this unattended .

piece of plants and looked up who owned IT that passport? Anthony y had scared fake the email. Daniel Kenny g at yahoo.

D A com made up the document n signature. IT wasn't really annual. This fake Daniel is what we now call a title pirate. Someone who buy fraudulent means steals a title to someone else's land.

and this kind of theft increasingly common. The FBI says they've seen more than a thousand of these cases, all of the country in the past few years as more real state transactions happen online. Someone owns a piece of land that they're not keeping close tabs on someone else in personates them and no one .

involved in the sale even notices that I miss things um that cause this bad situation to happen.

Um did .

you um that's. A good question, because at the end of the day, based on the facts, the answer has to be yes, because IT happened, right?

There are all kinds of things Anthony could have done. He could have video verified that danel was Daniel. He could have called a typo in the fake passport. He could have made reference calls on his client.

but he didn't, and neither did the real ter who made the listing. They kind of left all that responsibility to the title insurance company, the one that geno paid, one thousand, three hundred and ninety eight dollars to check the title, but was backed Daniel, their responsibility. We called the titles insurance company and they said, no, they were looking for defects in the title identity fraud. That wasn't something they were scanning for. So when they searched, there weren't any problems with the title itself.

I am, I ve asked myself the question a million times. Could I have done anything to see that this did not happen? And could .

you have.

Without overstepping my lie, my you know my role and stepping on toes of you know the professionals involved, I I don't really think so.

The title system is clearly messy. And wherever there is mess and a lot at stake, that creates opportunities for frazers.

The title insurance company is the professional entity. Assuming the risk of our attack together received by received property record system and the entire er real estate industry from the listing agents there are real ee state lawyer to the banks run in transactions to the people recording those transactions and counting off. This relies on these private title insures, which serve as a defacto centralized registry to catch any and all problems.

And there's actually an economics concept. Here is the idea of moral hazard. Basically, if you're buying tail insurance, then you get to be lazy, right? The needy grey research on the title that's not on you. You maybe don't need to worry so much about why a random south african dude is selling you a patch of land in connect cut because title insurance will take care of all .

of that now in lots of other insurance markets, moral hazard is bad. You don't want people with odd insurance to take more risk on the road just because insurance will cover the cost of their accidents. But in the world of real estate, you could say the system works Better.

It's more profitable, more efficient if buyers aren't so worried about risk, then they can just pocus on buying the house and not have to sit around doing detective work. But flagging problems before they happen is only part of the responsibility of a title insurance company. The other parties, when something goes wrong, they pay out, they absorb the cost of the risk.

And side note, something you should really know about title insurance is that almost never happens. Title insurance only pays out about three percent of all the money they bring in from titles insurance policies because it's rare for things to go wrong. Compare that to, say, car insurance, they pay out seventy percent of what they bring in. Or health insurance, that's like eighty percent.

But in the case of the overgrown lot slash apple tree forest is one of the rare times things they go wrong. And the title insurance company did pay, as did a few other responsible parties. Here's how at all played out. Did you sue anybody? Or did anybody do you?

Yes, both.

pretty much everyone involved ended up suing everyone else. In this case, every single party. Gina Daniel Anthony was a victim.

They were all defrauded. The case ended up in federal court. Real Daniel, who has never even been to south africa, wanted one thing.

My starting position was, you could really make everything go back to the time when this has never happened. You could tired on the house and you could replant the land, and you could pay me for my expenses. And I would be read to where I was before this ever happened.

Is that what you actually wanted?

Yeah, that's what I I was willing to accept. It's not like somebody lost in ARM and you can put their ARM back on. I mean.

this could be remedy. Obviously, that would not be a great situation for gina to have that million dollar house get torn down. Her idea was to figure out a way to keep the land.

We thought initially that we would be paid out three hundred and fifty thousand dollars and that we would have to use that money to try to figure out how to maybe buy the property from the owner. But IT was a complicated situation.

In the end, all parties ended up settling as part of the settlement. Daniel, the real Daniel, ended up selling the land to gina and her partner. They couldn't told me for how much, but I looked that up for one hundred and sixty five thousand dollars. Did you then end up buying the property twice?

yeah. yes. Theoretically, yes. We did because we did have we had to go through closing statements again.

And if you're thinking, man, these people, they all seem so kind and so gracious about this whole thing. That too was part of the settlement. None of them can disparate each other.

These days when you buys property from someone, she's doing a little bit more than just a cursy google search.

Obviously i'm a crazy loon now every time you know we did by a property while this was going on and you know but the builder knew the person, but I was a family estate, so I was asking a million questions. I wanted to make sure everyone that was involved design. So, you know, everyone was sort of taking deep breath with me because I think I was irritating everyone.

Real Daniel p has made his peace with all of this. And as for fake Daniel, he still has his money and he's still out there.

Today's episode was produced by sam yellow horse castle er IT was added by lies ager and fact checked by sera mor, engineering by valentino Rodriguez sanchez. Planet money's executive producer is alex gold. Mark, i'm jeff.

Glow amErica baris. This is N. P. R. Thanks for listening.

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