The act of falsely and/or fraudulently making or altering a legal document is known as forgery. Forgery, a felony, is punishable by imprisonment in a state penitentiary. Forgery affects title proceedings, and may result in extended title processes.

Forgery cases are increasing, and innocent property owners are the victims. Industry statistics indicate that forgery losses have tripled over the last decade, and are now responsible for over 20% of all losses paid by title insurers. The consumer’s chances of becoming a forgery victim are the greatest they have ever been.

Real property forgeries occur in several ways:

• A deed may be forged in an attempt to transfer legal ownership of a property without the true owner being aware of the transfer. A recorded security agreement for a loan from a lender may be eliminated by a forged document falsely showing the secured debt as paid, and allowing another loan to be fraudulently obtained.
• A person may forge a note and deed of trust, sell the note secured by the forgery, and vanish. The forgery goes undetected until the unsuspecting homeowner finds the cloud on the title when the note purchaser begins foreclosure proceedings for nonpayment of the debt.
• Someone may impersonate a notary, or a legitimate notary may fail to realize that the person signing the document is not the person whose name appears on the document.

The increasing occurrence of forgery has received serious attention. Title companies cannot rely only on avoiding or removing inadvertences or errors in recordings; they must now contend with criminal acts. The industry is revamping its practices and strengthening the notarization processes to close loopholes that might be used by forgers. Company employees are also given incentives to detect forgeries during the title examination and escrow closings.

The title industry also works with law enforcement agencies, assisting with the prosecution of forgers by providing expertise and the results of their investigations. The California legislature has responded to public concern by making forgery a felony punishable by up to three years in state prison, and severely limiting the availability of probation for repeat offenders. A fine of up to $75,000 may also be imposed for forgeries affecting homeowners. The title industry has moved forcefully to reduce forgery and lessen the opportunities for forgers to slip by.

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