What Are Free-and-Clear Properties?

Fraud is on the rise across all industries, and real estate transactions are a prime target. Due to the high-value nature of property sales, fraudsters are increasingly seeking ways to exploit vulnerabilities in the settlement and title insurance process. One of the most susceptible transaction types? Free-and-clear properties.

What Are Free-and-Clear Properties?

A free-and-clear property is one without any mortgages or liens. These properties are particularly attractive to fraudsters since there are no financial institutions with a claim to the proceeds of a fraudulent sale. Common fraud schemes involve identity theft or falsified ownership records to unlawfully sell or refinance these properties.

Red Flags to Watch For

• Recent changes in ownership, particularly if the seller acquired the property within the past year.
• Unencumbered vacant lots or absentee owners, making personal verification difficult.
• Rush title orders requiring closure within 1-2 business days.

Best Practices for Title Agents

Rocket Title Inc. is committed to safeguarding real estate transactions. Here’s how we can collectively mitigate fraud risks:

✔ Obtain a Free-and-Clear Affidavit – Ensure the seller affirms there are no outstanding mortgages or liens on the property.
✔ Assume Fraud Until Proven Otherwise – Investigate prior ownership changes and verify previous transactions.
✔ Establish Personal Contact – Speak directly with sellers or borrowers to verify their identity and intentions.
✔ Mail Verification Letters – Send letters to the property’s last known owner to confirm their involvement in the transaction.
✔ Utilize Remote Online Notarization (RON) – Fraudsters often fail the knowledge-based authentication and credential analysis required in remote notarization.

Stay Vigilant, Stay Secure

Fraudsters constantly evolve their tactics, but with proactive measures, we can stay ahead. By implementing these best practices, we protect not only our clients but also the integrity of the real estate industry.

If you suspect fraudulent activity in a transaction, act immediately. For questions or concerns, contact Rocket Title Inc. – together, we ensure a safer future for real estate transactions.