Layla Zulfa
New York City has taken a significant step to combat the pervasive issue of deed theft with the recent establishment of a dedicated Deed Theft Prevention Office. This initiative builds upon existing community-led efforts, such as the Homeowner Protection Program, aiming to equip residents with the knowledge and resources to identify, prevent, and respond to fraudulent property transactions that threaten to strip them of their homes. The move comes as experts highlight that for generations, real estate has served as a cornerstone of intergenerational wealth building in America, yet this very foundation has made certain demographics, particularly older adults and Black homeowners, disproportionately vulnerable to predatory schemes.
Scott Kohanowski, General Counsel at the Center for NYC Neighborhoods, recently sat down with HousingWire to shed light on the complexities of deed theft. His insights underscore the systemic factors that render specific communities susceptible, the tell-tale signs homeowners should be vigilant about, and the lessons other cities can glean from New York’s proactive approach. This interview, edited for clarity and length, delves into the heart of a problem that erodes both individual fortunes and community stability.
The Persistent Shadow of Deed Theft
The question of whether deed theft is an escalating crisis or a long-standing issue finally receiving adequate public attention is a complex one. Kohanowski suggests that the practice has always been a tool for building illicit real estate empires, particularly targeting distressed communities. While he is hesitant to declare an outright increase, he acknowledges that heightened public awareness, coupled with increased governmental and organizational resources, is leading to greater identification and reporting of these scams.
"I think this has always existed, and I think real estate empires have been built on deed theft, scam and predation that’s been targeting distressed communities, especially," Kohanowski stated. "I don’t know if it’s increasing, but I think we’re probably noticing it a lot more because there’s been so much attention brought to it. Also, especially in a place like New York, we have a lot [of] public resources and a lot [of] support from the state attorney general’s office. Because there are a lot resources, there are a lot of people working in this area, and they’re identifying the scams that are happening and generally raising that awareness."
The establishment of a centralized Deed Theft Prevention Office in New York City represents a crucial development. Historically, efforts to combat deed theft have been fragmented, involving various law enforcement agencies and civil legal service organizations. The new office aims to streamline these efforts, fostering better coordination and information sharing. This centralized approach is vital for effectively addressing the multifaceted nature of deed theft, which can manifest in various forms, from fraudulent loan modifications to outright title fraud.
Systemic Vulnerabilities: Seniors and Black Homeowners in the Crosshairs
The disproportionate targeting of older adults and Black homeowners by deed theft is rooted in a confluence of diminishing capacity, accumulated wealth, and deep-seated historical inequities. For seniors, the vulnerability often stems from declining cognitive abilities, making them susceptible to manipulation, and the significant equity they may hold in their homes, especially in high-value markets like New York City. The sheer market value of properties in areas like Manhattan and Brooklyn can make seniors, particularly those without robust financial or legal support, appear as easy targets for those seeking to exploit their assets.
"Well, generally, for seniors, it’s diminishing capacity, and it’s also that there’s so much wealth that a lot of the seniors are sitting on, especially in a place like New York City, where we have through-the-roof market values," Kohanowski explained. "Seniors are generally seen as an easy target, especially if they don’t have the resources or they don’t have somebody who’s helping them manage their affairs. As they get older, it just becomes harder and harder to keep on top of things and know who to trust."
The vulnerability of Black homeowners is a narrative deeply intertwined with America’s history of racial discrimination and economic exclusion. Kohanowski traces a direct line from discriminatory practices post-Civil War, through Jim Crow laws, and into the pre-Fair Housing Act era, which saw the implementation of discriminatory lending laws, ownership regulations, and restrictive covenants that systematically excluded African Americans from accumulating and protecting wealth through homeownership.
These historical injustices resulted in artificially depressed property values in Black communities. However, with the advent of the Fair Housing Act and subsequent gentrification, particularly in cities like New York, these once undervalued neighborhoods have seen their property values skyrocket. This surge in equity, often in properties owned outright by families who acquired them generations ago without the burden of a mortgage, presents a lucrative opportunity for predatory actors.
"For historically Black communities, Black Americans, Black homeowners and new Americans, immigrants – a lot of those demographics don’t have access to information and legal resources and the things that help folks protect their homes and protect their assets," Kohanowski elaborated. "You can trace a direct line back to post-Civil War Reconstruction, then Jim Crow, then the Great Migration north, and then before the Fair Housing Act, we had these discriminatory lending laws and ownership laws and restrictive covenants that disproportionately affected African Americans and excluded them from a lot of the protections that we now have."
He continued, "Those families or individuals who were able to acquire properties at that time had artificially depressed property values because of these restrictive covenants and redlining practices. But then once we had the Fair Housing Act, a lot of these areas that were historically artificially depressed in value – in places like New York – those areas have rapidly gentrified. It’s not uncommon to have a Harlem brownstone that’s now worth $5 million and there may not be any mortgage on that property at all because a great grandmother wasn’t able to get a mortgage. Fast forward 30 or 40 years, and you have a very high value property with a ton of equity. A lot of the scammers and predators see that as an opportunity to mine wealth out of those communities and to strip that equity and appropriate that equity."
Red Flags for Real Estate Professionals and Homeowners
The real estate industry, encompassing agents and title companies, often serves as the final barrier between a homeowner and a fraudulent transaction. Kohanowski emphasizes the critical need for these professionals to move beyond a perfunctory review and actively scrutinize transactions for signs of foul play.
"For that side of the industry, it’s making sure that they’re not rubber stamping a lot of these sketchy transactions," he advised. He highlighted the presence of "potted plant lawyers" – legal representatives who appear to be acting in the homeowner’s interest but are, in fact, colluding with perpetrators, a tactic often seen in foreclosure rescue scams.
Furthermore, a lack of direct communication between title companies, real estate agents, and the principal parties involved (the homeowner or buyer) should raise immediate concerns. Forging deeds and employing bait-and-switch tactics in foreclosure rescue schemes are common predatory methods. The core principle, Kohanowski stresses, is to ensure that individuals are fully aware of and understand the documents they are signing before relinquishing their rights or assets.
Lessons from New York: A Model for Urban Protection
New York City’s commitment to homeowner protection, exemplified by the Deed Theft Prevention Office and the Homeowner Protection Program, offers valuable insights for other municipalities. The integration of various governmental and non-governmental efforts under a single, public-facing office is a key strength.
"New York and New York City have developed, over time, some robust protections for homeowners – not just in terms of foreclosure or inherited property – but what we’re talking about right now with deed theft and real property fraud and schemes, scams and predation," Kohanowski noted. He underscored the significance of a centralized agency that coordinates actions across different law enforcement bodies and civil legal service organizations.
The New York State Office of the Attorney General, under Letitia James, has played a proactive role, convening a deed theft task force that brings together law enforcement and civil legal service organizations to share intelligence and identify emerging threats. However, the transition to a public-facing office that is directly accessible to communities represents a crucial evolution, enhancing transparency and empowering residents to seek assistance proactively.
Heirs’ Property: An Unacknowledged Wealth Drain
The issue of heirs’ property – real estate inherited by multiple family members without a clear probate process – is gaining national attention as a significant, often overlooked, source of wealth erosion, particularly in Black communities. Kohanowski describes how this situation can leave properties, like a multi-million dollar brownstone in Harlem, in a legal limbo for decades after the original owner’s passing.
"Heirs’ property is a really hot topic right now nationally in the home preservation circles because I think it accounts for a large part of wealth that’s held in homes, especially in Black communities," he stated. "It’s something that I think has been happening for a long time. We originally saw it happening in places like the Gullah Geechee Islands and the South Carolina coast, but we saw the same practices transplanted into New York City."
The challenge lies in the fact that by operation of law, numerous heirs automatically acquire a stake in the property. This fragmented ownership can make it exceedingly difficult to sell the property, obtain financing, or even maintain it. Predatory actors often exploit this complexity, offering to buy out heirs at a fraction of the property’s true value or initiating partition sales that can lead to the loss of family assets. The Center for NYC Neighborhoods is actively working to educate homeowners and heirs about estate planning and their legal rights, aiming to unlock the substantial wealth held within these properties.
The Data Dilemma: Towards a National Deed Database?
The fragmentation of land records across different jurisdictions poses a significant hurdle in the fight against deed theft and other real estate fraud. While New York City benefits from publicly accessible, online land records, the system’s local nature and variations between counties create challenges. Kohanowski expresses skepticism about the feasibility of a national deed database in the near future, given the current low-tech nature of many local jurisdictions.
"New York City is great because all of our land records are public, online and freely searchable, and that helps us as advocates working in this area. But all that information is local, and every municipality or every local clerk might have a different system," he observed. "New York has 50-plus counties and every county has a slightly different variation on how to look at land records and how to trace title. I don’t know if that’s something that can even happen at a national level because it’s so local. But maybe AI could help."
Moreover, Kohanowski points to a disturbing practice where municipalities publicly release information about homeowners facing financial distress, such as those behind on property taxes or in foreclosure proceedings. This information, while intended for official purposes, inadvertently creates a "target list" for scammers and predators actively seeking vulnerable individuals. This highlights the urgent need for better data management and protection protocols to prevent sensitive homeowner information from being exploited.
In conclusion, the establishment of the Deed Theft Prevention Office in New York City is a crucial step forward in safeguarding homeowners, particularly those historically marginalized and vulnerable. The insights provided by Scott Kohanowski underscore the deep-rooted nature of deed theft, its disproportionate impact on specific communities, and the multifaceted strategies required to combat it. As cities grapple with the complexities of urban development and wealth preservation, New York’s model offers a beacon of hope and a blueprint for protecting one of America’s most vital assets: the home.
