Gov. Kathy Hochul on Tuesday signed legislation intended to crack down on scammers stealing properties — usually from Black and Latino homeowners — across New York City and the state.
The practice, known as deed theft, is rampant in the five boroughs, with offenders often targeting homeowners facing financial trouble, or the estates of deceased homeowners, using layers of transactions, dubious legal documents and outright forgery to take possession of properties to disguise their fraudulent deals.
“There are some twisted cruel people out there hellbent on scamming vulnerable New Yorkers and they’ve been getting away with a lot,” Hochul said, adding that homeowners in Black and Latino neighborhoods were particularly vulnerable.
But, she added, there have only been “a handful of convictions” against real estate criminals accused of stealing homes. New York City’s Sheriff’s Office says it has fielded more 3,500 deed theft complaints since 2014. A fraction of those resulted in any criminal penalties.
The state’s new measure is supposed to make it harder for scammers to flip properties and establish a chain of ownership that obscures the initial fraud or makes it harder for victims to recover their properties.
The new law specifically allows state and local prosecutors to “flag” properties that may have been obtained through deed fraud and eliminate protections for buyers in future transactions. Scammers often flip the homes or transfer them to related companies to complicate the chain of ownership and make it harder for the former owner to get their home back. Some attorneys refer to the practice as “title washing.”
The legislation also halts eviction proceedings against homeowners who become tenants after a deed scam if they show the property is the subject of an investigation. That scenario could help New Yorkers facing eviction from their longtime homes if they are defrauded or unwittingly turned over the title to scammers.
Attorney General Letitia James helped draft the legislation and called deed theft “a heartless and merciless crime that steals people’s homes with knowledge.”
“More importantly, it steals generational wealth from Black and brown communities,” she said, referring to the prevalence of schemes in places like central Brooklyn and southeast Queens.
But some attorneys representing homeowners who say they are victims of fraud say the measure will mean little if state and local prosecutors don’t commit more time and energy to stopping deed theft.
“Deed theft was always illegal,” said attorney Bill Lienhard, who represents a family suing to recover their home from an investor repeatedly charged with stealing properties. “The main problem has been a lack of political will to engage in aggressive law enforcement.”
Lienhard said he and other attorneys representing victims of deed theft worry the measure could delay justice for some homeowners because it may halt their civil cases if the property is involved in a criminal investigation. Those investigations and prosecutions can take years to complete.