As odd as it may sound, asking whether someone can sell a house they don’t own is a question worth considering. Throughout New York, laws concerning real estate deals are meant to defend property owners, and selling houses fraudulently is a big legal matter.
Article 10 of New York Debtor and Creditor Law covers fraudulent conveyances, which gives a fraudulent underpinning to selling a house that you do not own because it seeks to escape a creditor’s grasp.
Not all of them are illegal however, as there exists some lawful ways in which a person may enable the sale of a house without them being the owner. Knowing both the fraudulent and non-fraudulent explanations is important for sellers and buyers of houses in New York. Keep reading to learn everything you want to know!
Understanding Property Ownership in New York
Possession of a property is more than simply residing in a house or possessing its keys. It includes ownership ascertained through deeds or other legal documents that guarantee a holder’s claim to the property in question. Deeds serve as the key to ownership for proprietors in real estate and are stored with the county clerk’s office in New York.
The deed system has evolved to offer a clear record of property ownership. Each exchange of assets results in the production of a new deed which subsequently results in the formation of a chain of titles. The existence of this chain of titles helps in establishing valid ownership.
Legitimate Ways Someone Might Sell a House They Don’t Technically Own
Though there are some deceitful practices in property selling, there are quite a few ways that someone may sell a house legally without having proper ownership documents. Here are some ways to consider:
Acting as an Agent or Representative
A realtor is not an owner of the house they are selling. They work for the seller and have a listing agreement that clearly outlines their role and the scope of their authority. The agent is responsible for advertising the house, showcasing it to possible buyers, negotiating the sale, but the ownership of the property is never taken up by the agent.
The same goes for a person who possesses power of attorney who can legally sell a property for a holder of the title under the described legal Power of Attorney Agreement. This is a document that gives authority to one person to act on behalf of another. This is used in situations where a property owner is elderly, sick, or living abroad, and is unable to handle the sale in question.
Probate Sales and Estate Representatives
When a person passes away, their estate will most likely go into probate. This is the legal process that divides the decedent’s estate. During this legal activity, they can either name an executor (who is designated in the will) or an administrator (who is assigned in absence of a will) to take control of the estate. This may include selling different properties whenever necessary.
Regardless of whether the individual is acting as executor or administrator, they do not own the estate, but claim full legal power to sell the estate. They are bound to fiduciary duties of loyalty, prudence, and impartiality vested in the estate and its heirs as dictated by the will or state law if there is no will. The funds attained from the sale are the estate’s funds and not the executor’s (unless they’re also a beneficiary).
Court-Ordered Sales
In some instances, an owner’s property can be put on sale despite their intent because a judge has ordered it. These sales that are legally sanctioned prove that, in some cases, a property can be sold without the consent of the owner.
In divorce proceedings, one of the parties may be granted the power to sell the marital home, even if both parties are on the title. When a homeowner stops paying their mortgage, the bank has a right to sell their house, which is considered a foreclosure sale.
Furthermore, local authorities hold auction sales for properties for which property taxes have not been paid, these are referred to as tax sales. In both tax and foreclosure sales, the bank or government does not totally possess the property, but they do have the legal authority to sell it to retrieve the owed funds.
Property Under Contract: Wholesaling and Assignments
In wholesaling, an investor purchases a property from a seller and signs a contract of the purchase with them. While the investor is closing on the property, he or she gets another buyer who is interested in the property.
The initial buyer relinquishes his or her right to purchase the property to the new buyer for a specific sum. The investor never actually owns the property but sells their contractual right to purchase it.
As long as the initial buy agreement permits assignment and all persons are properly notified, this practice is permissible in New York. A wholesaler is required to disclose his position and cannot portray himself as the owner of the property. They do not sell the house; they sell their contractual rights of purchasing the house.
Fraudulent Ways People Sell Homes They Don’t Own
Financial fraudsters employ different types of tricks to sell houses owned by someone else. These schemes are immensely harmful to both the rightful owners, and to unsuspecting purchasers.
Deed Fraud: A Rising Concern
In deed fraud, scammers forge various documents with the aim of claiming ownership of property through deception. Once the fraud is recorded and the county clerk has been informed, the scammer sells the property or takes out loans against it.
Deed fraud is one such fraudulent activity that has been growing at an alarming rate in New York. Homes that are unattended and include an elderly owner and a strong competition amongst real estate businesses are the main targets.
Fake Listings & Phantom Properties
With the intention of committing fraud, scammers display properties that do not belong to them. They have even gone to the extent of breaking into homes that are available for rent. Payment in full or just the deposit is taken. Usually properties that are unmonitored like homes meant for vacations or those in probate are the most vulnerable.
Identity Theft in Property Sales
Making use of false identification, criminals sell houses registered under the name of the owner committing fraud. They can easily sell it to the intended target who does not require much verification.
It is much easier in today’s world with remote closings having become common since the pandemic, cash buyers are the most targeted and because of them fraud has been made much easier. The scam only becomes noticeable once a tax document is sent or they see strangers occupying their house.
What to Do If You Suspect Fraud
The first step is to contact the local police department. Since property fraud is a severe crime, the police, particularly in larger cities such as New York, do have divisions dedicated to real estate crimes. Make sure to report in detail all the evidence you have on file that suggests fraud.
It is important to file with the New York State Attorney General’s Office as well. The Attorney General’s Real Estate Finance Bureau handles prosecution and investigation of real estate fraud on a state level. They have specialized resources for property fraud and can work with different agencies if necessary.
Additionally, the county clerk’s office where the property is located should be advised. They need to know if fraudulent deeds are on record so that the property records can be flagged and no additional fraudulent filings can take place. Some clerks offices have specific procedures in place to deal with suspected deed fraud.
It is important to engage a real estate attorney who knows how to handle property fraud cases for legal assistance. A qualified attorney will assist you in filing documents representing your ownership, for instance, an affidavit of fraudulent deed. Attorneys also represent clients in court proceedings and fight for damages if the client has been a victim.
If you are in the process of buying a property, and there is a suspicion that the seller is not the actual owner of the property, pause the transaction. People who want to close deals quickly, avoid basic checks, offer low prices, and cannot give clear answers related to the property are suspicious. It is better to miss a possible opportunity than to find yourself on the wrong end of a fraudulent scheme.
Conclusion
Now you have the answer to the query, “Can someone sell a house they don’t own? The direct answer is yes and no. There are valid cases when a person not in possession of a title can legally sell a property, but doing so without authorization constitutes fraud, and that has serious legal consequences.
Engaging credible professionals (real estate attorneys, licensed real estate agents, title companies) is important when purchasing a property. These people assist with verification of ownership which protects clients from being duped. Homeowners can mitigate the chances of getting scammed by maintaining fraud alert services and monitoring their property records frequently.
Frequently Asked Questions
- How do I verify the legal title of a property in New York?
Confirmation of legal title can be accomplished through the county clerk’s office or county recorder’s office in your county. A lot of counties in New York have online systems where you can look up property records by address or owner’s name. The deed will show the current property owner(s).
- What steps should a buyer take in order to verify the legitimacy of a home seller?
Always consult a trustworthy real estate lawyer who will complete a title search prior to closing. Purchase title insurance to defend yourself from disputes regarding ownership. Avoid sellers or offers which appear suspicious or excessively generous because they might not want to go through the scheming steps. Always double check the seller’s name and ownership with proper channels before wiring any funds.
- Are other family members able to sell a joint owned property without the consent of all owners?
No. When persons own a property, all owners must agree on the sale of the property. However, there are some exceptions which include a court may allow a sale of property in partition actions or someone with power of attorney can sell the property or in certain situations, majority owners can petition the court to override minority owners objections. Always talk with a real estate lawyer about jointly owned property.
