Forged deeds are deeds signed not by the owner but someone else without the owner’s knowledge. Signatures on deeds to be effective normally need to be notarized by a notary of the public. Forged deeds are done by criminals and are recorded with the recorder of deeds. Sometimes these criminals borrow money against the property. After the money is lent, the lender starts foreclosure procedures. Then this forgery comes to light. The victim in order to prevail must demonstrate that the deed is false. This is normally done by proving the recorded deed does not bear his or her signature. When the owner proves that the deed to the criminal is fraudulent, then everything that the criminal signed will be declared invalid.
Thus Bob obtains a forged deed to Susan’s house unbeknownst to Susan. Bob’s lender gives Bob a mortgage on this house for $100,000.00. Bob pockets this $100,000.00. Bob doesn’t make any payments on the mortgage. The lender starts foreclosure proceedings and Susan then discovers this forgery. Susan files a suit to Quiet Title. When Susan proves that Bob’s deed is a forgery, then Bob’s mortgage likewise vanishes from being of record. The lender is out $100,000.00. To cover this scenario lenders obtain title insurance—insurance on who owns this property. In this scenario happens if the lender has title insurance, then the title insurance will pay the lender the amount of the loan.