Wednesday, December 3, 2008

Stealing the Empire State Building

The New York Daily News tried to show that it is easy to "steal" property by filing fake deeds. The story is rather foolish, but if you want to read it: It took 90 minutes for Daily News to 'steal' the Empire State Building.

The reporters think that by filing a forged deed, they somehow could control the building and get a mortgage. Sure it is possible to try to steal money by going through this exercise. Of course you are just leaving a paper trail that makes it easy to figure out what happened and get caught. I could also jump into a car and drive off. That is stealing too.

What is wrong with the story? The property manager is unlikely to turn over the bank accounts to some unknown person just because they have a deed. Tenants are unlikely to redirect rent payments without more evidence of a transfer. A mortgage lender is not going to turn over loan proceeds based on mere deed. One reason to insert lawyers into the real estate conveyance process is to prevent scams like this.

Mortgage lenders demand lots of documentation because they try to avoid scams like this. Mortgage lenders get title insurance to protect against fraud and scams.

It was a stunt and created an interesting headline. However, someone is likely to pay a fine or go to jail for it. I am not a New York lawyer but I would guess that there is a law against filing fake documents.

Disclaimers
Image is by David Shankbone from Wikimedia Commons

4 comments:

David Stejkowski said...

Great catch, Doug. Someone, imho, ought to get in trouble for this one.

Doug Cornelius said...

It reminds of the revised UCC when everyone was shocked that people no longer had to sign the financing statement. It was clear that the signature had no value because the recording desk could not validate the signature.

Here, there is little likelihood that the register could find a fraudulent signature or notary seal. We are relying on notaries to enforce the authenticity of the signatories. If we shift that to the registrar then we need to start worrying about registrars being involved in fraud.

The result is that same. It is illegal. It is fraudulent. Someone gets in trouble for passing bad papers. It is just a question of who is involved.

David Stejkowski said...

Yes, I remember that shock when Article 9 was revised. And now it makes so much sense!

All this story, as your point out, does is encourage more people to perform more shenanigans, which makes a mess out of the chain of title, makes title examination more difficult and potentially creates a morass of issues you and I can talk about all day.

Here in Illinois, we have at least one lawyer who performed several fraudulent conveyances involving churches. He was sentenced to twelve years in prison. In response, the legislature just passed a law requiring notaries to take thumbprints and maintain an accurate register of acknowledgments, but only for residential conveyances in Cook County.

In short, someone needs to throw some books at people.

commercial real estate said...

thanks for the article link...they should do something so this shouldn't happen again..