Watchdog calls for NJ legislators to do more to prevent real estate fraud

A state watchdog is urging New Jersey legislators to strengthen protections against deed fraud, warning that real estate scams have risen since the pandemic without sufficient regulations in place to stop swindlers.

The State Commission of Investigation began looking at deed fraud in 2024, after the FBI’s Newark field office warned of an uptick.

There’s no statewide tracking of deed theft, so it’s unclear how common it is, the commission wrote in a report released Thursday. But county clerks and prosecutors told investigators that scammers have capitalized on a post-pandemic shift to more business being done remotely — including real estate sales — to pretend to be a property’s owner and illegally record a deed under a new name.

“The reduction in face-to-face real estate transactions, from the initial stages on, has made it more difficult for many in the process to detect potential frauds, making it easier to impersonate legitimate property owners and submit fraudulent instruments for recording,” the report says. “The concurrent expansion in online access to land records and other personal information also has contributed to the rise in this and other identity frauds.”

Fraudsters most often target elderly, deceased, or absentee property owners as well as vacant, seasonal, and remote properties, where their illicit activity isn’t as quickly noticed, the report said.

Investigators shared several examples of the schemes, including imposters who sold the Gloucester County home of a recently deceased man and then rented it out to unsuspecting tenants, an unwitting buyer who paid $60,000 to scammers posing as the owners of a vacant Warren County property, an elderly couple that learned a scammer had listed a wooded Hunterdon County lot they owned for sale on Zillow, and a Middlesex County man who discovered his vacant land had been fraudulently sold when he went to pay his taxes and was told his account had been closed.

The commission urged lawmakers to act on several bills already in the Statehouse pipeline.

Those proposals would require people to submit additional paperwork to prove legitimacy when recording a deed, require county clerks to notify the original owner of the deed change, establish a property alert service notifying participating property owners within seven days of any filing affecting the property (all 21 counties besides Hunterdon and Warren already have some form of this service in place), and require limited liability companies to disclose their ownership when filing a deed for certain residential properties.

“The failure to act inevitably will lead to more harm for defrauded New Jersey property owners,” investigators wrote.

The agency said policymakers also should consider:

• Enacting statewide standards that require real estate brokers and agents to better verify sellers’ identities to detect impersonation schemes and fraudulent listings before they reach the market.
• Requiring all signers of a real estate transaction to provide their thumbprint.
• Tightening notarization rules especially for those done remotely to guard against counterfeit notary stamps and forged signatures.
• Requiring all notaries involved in real estate transactions to be added to counties’ property-alert services so they would be alerted to any unauthorized use of their credentials.