Carol's Corner Columns

Condo Co-op Help Line: Beware of Fraudulent Deeds

Adobe Stock / Aleksandr

Owners of single-family homes in New York City, particularly in gentrifying areas of Brooklyn, Harlem and Washington Heights, are becoming victims of deed theft. Boards and managing agents, as well as title companies, real estate brokers, and agents and attorneys for cooperative and condominium buildings need to increase their vigilance in any transactions impacting title to shares or units to protect against similar schemes. City and state officials have been paying more attention to this issue in recent months.

There have been waves of complaints of fraudulent deeds received by the New York City Department of Finance over the years (see FY 2018/2019 1st Quarter Report Notice of Recorded Document Program Local Law 249-2017). Local Law 249-2017, which became effective July 1, 2018, requires the New York City Department of Finance to notify property owners when documents are recorded against their property and to provide a report to the City Council that includes complaints.

Questions about fraudulent deeds were raised by Brooklyn Borough President Eric Adams and City Council Member Robert Cornegy, Jr. in November 2018. Adams and Cornegy demanded an investigation. Simultaneously, Manhattan District Attorney Cyrus Vance convened a grand jury to investigate the issue. The Manhattan grand jury issued a 53-page report with recommendations on December 13, 2018. The report found that owners of “single-family brownstones in culturally diverse and rapidly gentrifying” areas of Brooklyn, Harlem and Washington Heights were being dispossessed by a variety of fraudulent schemes. A copy of the report is available here.

The grand jury reported that in these neighborhoods, the homes had been in the same family for many years, up to two or three generations. As the current owners aged, some of the properties accumulated liens. If the current owner passed away, the property might become unoccupied or dilapidated.

The fraudsters would scour city records, visit targeted neighborhoods and locate properties that appeared vulnerable. The fraudsters were so brazen that they sometimes would forge the last owner’s signature on a deed. The fraudsters would then be free to sell, mortgage or develop the properties.

In response to the grand jury report, the New York City Department of Finance has placed a “Deed Fraud Alert” on its website and initiated an online reporting link and a brochure entitled “Protect Your Home: Deed Fraud Guide.” It can be found by searching here.

New York State Attorney General Letitia James and her office have been investigating individual cases and pressing charges with success.

On October 22, 2019, Governor Cuomo directed the New York State Department of Financial Services to conduct a full investigation of deed fraud in Brooklyn. The governor directed the department to send a Foreclosure Relief Unit to Brooklyn to assist victims of deed theft. The hotline to report deed theft is: 1-800-342-3736.

While cooperative and condominium units have not typically been the targets of these schemes, there is little doubt that the enterprising fraudsters will not stop with single-family homes. To protect your building, you should employ a version of the familiar phrase “know your customer.” When properties are transferred, have a representative present at the closing. Be certain that the seller and the buyer are exactly who they say they are, based on government-issued identification. Confirm that the seller of the unit is indeed the person that the building records show is the owner of the unit. If there are any questions about the identities of the seller and buyer, or any other issues, contact your building’s attorney for assistance.

This column presents a general discussion. This column is not intended to provide legal advice. You should consult your attorney for specific legal advice.

Carol A. Sigmond
Porzio, Bromberg & Newman P.C.
156 West 56th Street, Suite 803
New York, NY 10019


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