- February 29, 2012
- All Issuing Offices
- Reducing Fraud and Forgeries in the Execution of Documents
Fraud and forgeries are a concern in every real estate transaction. This Bulletin reminds you of some of the issues relating to the prevention of fraud and forgeries in the execution of documents.
All recorded documents must be signed in accordance with the applicable execution and attestation requirements of the jurisdiction where the property is located.
Exercise caution if recordable documents are delivered at closing but executed elsewhere. Where possible, require that all recordable documents are executed and acknowledged in your presence. You should require copies of government-issued picture identification from all signers of all recordable documents, whether such documents are executed in your presence or not.
If recordable documents are to be executed out of your presence, where possible, require that such documents are either:
- executed in the office of an attorney; or
- executed in a local Stewart Title Issuing Office.
Names and Signatures
It is important to look at the names and signatures on the recordable documents, particularly when they are prepared and/or executed out of your presence. The following are examples of red flags that should prompt further investigation:
- The name of the grantor or mortgagor is spelled differently from the name of the record
- The name of the spouse joining the grantor or mortgagor, who is conveying or mortgaging
the property, is different from the name of the spouse who joined him or her in a prior deed
- The signatures on the current documents are different from the signatures on previously
recorded documents or on the government-issued picture identification.
- The notary's seal is irregular, or the notary is not listed in the state's records.
Section 6.36 of the Underwriting Manual - Forgeries - contains additional red flags that may indicate the presence of fraud or forgery in the execution of documents.
Powers of Attorney
Exercise caution when presented with a power of attorney. You should verify the following before accepting any power of attorney:
- The power of attorney is properly executed and acknowledged, and capable of being
recorded in the applicable jurisdiction.
- The instrument is clear regarding the authority given to the attorney-in-fact.
- Inquire as to the reason that the principal(s) will not attend the closing.
- Speak directly to the principal(s) at or immediately before closing to confirm that the
principal is alive and the instrument has not been amended, revoked or terminated by the
- Obtain copies of government-issued picture identification of: (A) the principal(s), and (B)
Section 15.52 of the Underwriting Manual - Powers of Attorney contains additional factors to be considered when presented with a power of attorney.
"No Consideration" Deeds
Deeds given for no consideration, including gift deeds and intra-family deeds, present unusual issues and should require special attention.
There may be legitimate reasons for "no consideration" and intra-family deeds, for example, transfers between spouses in connection with a divorce, or transfers to adult children or other relatives in connection with estate planning. However, deeds given without consideration may raise concerns relating to fraud or forgery. They may also present issues regarding the grantor’s capacity. You should proceed with caution if you are asked to insure a transaction that involves a current deed given for no consideration or one appearing in the recent chain of title (i.e., subsequent to the most recent arms-length transaction that included institutional financing).
"No consideration" deeds can sometimes be identified in the chain of title by noting the absence of mortgages executed and/or released contemporaneously with a deed. Deeds given without new financing and/or without a payoff of the existing mortgages or deeds of trust are frequently given for no consideration. In states requiring payment of a deed tax or transfer tax, a "no consideration" deed can sometimes be identified by examining the taxes paid upon recording.
Factors to be considered if you are asked to insure a "no consideration" deed, in addition to standard care when insuring any recordable document, include the following:
- Is the grantor present at the closing?
- Has the grantor explained the reason for the "no consideration" deed?
- Is the grantor represented by an attorney?
Consider requiring a current affidavit from the grantor memorializing: (A) the grantor’s intent to transfer the property for no consideration, (B) the grantor’s execution and delivery of the "no consideration" deed, (C) the absence of undue influence or duress, and (D) an explanation of the grantor’s absence at the closing, if applicable.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- NL000003 Forgeries
- SLS00234 Loan Fraud (Replaces both SLS00229 and SLS00230)
- SLS00247 Fraudulent Release Schemes
- SLS2008013 Red Flag Rules - Identity Theft Prevention
- SLS2009013 Fraudulent Reconveyance Documents
- SLS2011016 Fraudulent Release of Deed of Trust or Mortgage [Revised 09-12-11]
- SLS2011017 Stewart Title's Forgery Watch Award Program [Revised 3-25-13, 2-12-14, 2-17-14 and 3-11-15; 3-30-16; 9-1-16; 3-21-17; 1-15-19]
- Underwriting Manual:
- 1.16 Acknowledgments
- 4.16 Deeds Of Conveyance
- 6.36 Forgeries
- 6.38 Fraud
- 15.52 Powers Of Attorney
- 16.04 Quitclaim Deeds