Title Fraud Issue – Accept Payout or Push to Clear Title?

[Valeria Gutierrez]

Hi everyone,

I’m dealing with a title fraud situation on a property I purchased in Cleveland. It turns out there was a forged deed in the chain of title prior to my purchase (seller impersonation).

I filed a claim with my title insurance, and they’ve offered to pay the full policy amount (~$37K). However, they’re not giving clear answers about what happens to the title if I accept the payout—specifically whether the defect remains or gets resolved.

The property itself needs work, and ideally I’d like to resell it, but I’m concerned about marketability if the title isn’t properly cleared.

I also paid a $12K wholesaling fee as part of the purchase, which is not currently being addressed.

Questions:

• Should I accept the payout or push them to cure the title?
• Has anyone dealt with a similar forged deed situation?
• Is a quiet title action worth pursuing in parallel?
• Any chance of recovering additional costs like assignment fees?

Would really appreciate any guidance or experiences.

Thanks in advance!

[Kevin Sobilo]

@Valeria Gutierrez, a few thoughts:

1. Your title insurance coverage is what it is. I assume they are giving you a payout for the "loss of value", NOT to cover expenses you have paid. So, I don't think listing expenses is part of a valid argument about how much they should compensate you. 

2. I don't think a quiet title could cure a forged deed in the way you believe. I think a quiet title would be used for the real owner to remove the fraudulent deed and every deed after that including your deed to restore clear marketable title FOR THEM!

3. Have you considered doing the leg work to address this title issue yourself with support from your real estate lawyer? 

4. Who forged the deed? Why did they do it? How long ago was it done? How did you find out? Is the true owner still alive and what is their position? 

5. Have the police been notified? 

6. I will give an example I experienced as an agent and then shift it to fit your situation to show how situations like this can sometimes be resolved:

Years ago, I was representing the buyer in a sale when an issue came up on the title search. 40 years prior, a brother and 2 sisters were selling the property, BUT only the brother signed the deed with the sale! So, nobody knew whether the sisters actually intended to sell the property.

Fortunately, the buyers actually realized that they attended church with the sisters who were in their 80s. When contacted, the sister's said they absolutely intended to sell the property 40 years ago and received their proceeds. 

So, the sister's simply signed a quit claim deed to cure the defect in the title chain. 

If the brother signed his sister's names on the deed, that would be a similar situation as yours AND could have the SAME RESOLUTION if you are lucky!

7. Another thing to look at is what kind of deed you received? If for example, you received a "General Warranty" deed then the person who sold it to you is ALSO responsible for clearing up this defect or compensating you even if the issue existed prior to their ownership. 

However, in my experience most deeds I see are "Special Warranty" deeds which only cover defects arising during their ownership not before, but its worth checking your deed to see if you can get compensation from anyone else.