New property fraud prevention program shows signs of success

New property fraud prevention program shows signs of success

‘Fraudsters are filing fake documents that convey real property to the improper owner. It is real, it is happening across this state, and it is happening in your district’

Anti-property fraud legislation crafted with the help of Florida Bar experts is showing early promise, a Southwest Florida court clerk told lawmakers Thursday.

Lee County Clerk & Comptroller Kevin Karnes told the House Civil Justice Subcommittee that HB 1419, written with the help of the Real Property, Probate and Trust Law Section and approved by the Legislature in May, is targeting a serious threat.

“Fraudsters are filing fake documents that convey real property to the improper owner,” he said. “It is real, it is happening across this state, and it is happening in your district.”

A typical scenario involves a scam artist offering a vacant lot for sale online, Karnes said. Buyers don’t discover they’re victims until a property tax notice fails to arrive.

Fraudulently filed deeds can lead to evictions, Karnes said.

“It kind of gets darker for the real owner when this happens,” he said.

Among other things, HB 1419 created an early warning system and a Lee County pilot program that requires clerks to demand a photo ID when recording a deed.

Karnes said 64 of Florida’s 67 clerks already offer an automated system that alerts property owners when a deed, mortgage, or other official record is recorded in their name.

The system will be up and running in all counties by July 1, 2024, Karnes assured. Property owners can register for free at http://www.flclerks.com/Page/PropertyAlertServices.

Committee Vice Chair John Snyder, R-Palm City, pronounced himself impressed after testing a QR code that Karnes included in his presentation.

“I just did the registration,” Snyder said. “It takes about 60 seconds. It’s a great way to protect our pocketbooks.”

Lee County’s alert system serves nearly 46,000 active registrations. It became operational in 2019, but more than 87% of registrations were between 2022 and 2023, Karnes said.

Karnes acknowledged that clerks need to promote the system more. Lawmakers could help by enacting a public records exemption to shield the personal identifying information that participants submit, Karnes said.

Meanwhile, it’s too early to determine the full impact of the pilot program, Karnes said.

His Lee County staff has been demanding a photo ID when a “customer” present a deed for recording, but it’s unclear how many scam artists it may have deterred, he said.

Of the 1,033 total deeds Lee County recorded in August, 160 were rejected, or about 15%. About half, 84, were rejected for failure to show ID and another 12 were rejected for presenting illegible photocopies of IDs. Sixty rejections were for failure to present a business entity ID.

The rejection rate fell to 6% by September, as more people became aware of the new requirements, Karnes said.

“There has been an overwhelmingly positive reaction from Lee County citizens. They are incredibly grateful that we are doing something in this space,” he said.

But challenges remain, he said.

Because HB 1419 didn’t define “presenter,” Karnes said his clerks are demanding IDs from grantors and grantees. He suggested lawmakers consider amending the law to include a definition.

Also unclear is whether clerks should demand IDs from notaries and witnesses, and what form of ID businesses, non-profits and other entities should present, Karnes said.

Karnes expects his office to have a better on the pilot program’s fraud-prevention efficacy in a few months.

Hillsborough and Miami-Dade County clerks have expressed an interest in participating if lawmakers expand the pilot, Karnes said.

Karnes urged lawmakers to consider closing a “loophole” in F.S. §695(3)(c) that exempts out-of-state recording instruments.

Existing law prohibits a clerk from refusing to record a deed that meets minimum legal requirements, even if the clerk suspects fraud, Karnes reminded lawmakers.

Rep. Rick Roth, R-West Palm Beach, said he was astonished that clerks’ hands are tied.

“It just seems logical,” he said. “We need to have some ability to pause when you think something may be wrong.”

Giving clerks that authority would create more challenges, Karnes warned.

“It’s really difficult to know if you are looking at a fraudulent document,” he said.

Police would have an easier time tracking suspects if every clerk installed a video monitoring system, Karnes said. But he warned that would pose funding and privacy concerns.

The policy discussion was bipartisan, and red meat for a committee that is heavily populated by lawyer/lawmakers.

“I’m nerding out on this. I do practice probate and estate planning. Have you contacted the RPPTL section of The Florida Bar?” asked Rep. Ashley Gantt, D-Miami.

“Absolutely, they were an integral party to building HB 1419,” Karnes said.

“They frankly helped me draft the bill,” said the bill’s sponsor, Rep. Will Robinson.

A lawyer/lawmaker from Bradenton, Robinson is the committee chair.