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Forgery of Real Estate Documents

Laws against forgery of documents have existed for almost as long as writing itself has existed. For most of that time, forgery techniques did not change very much. However, modern digital technology has significantly expanded opportunities for people to create fraudulent documents. Real estate transactions are making increasing use of “paperless” applications, but most areas of real estate remain firmly rooted in paper. This is particularly true of public real property records. While the media in California might report on how blockchain and other digital tools are changing the real estate business, yet real estate forgery is still mostly rooted in creating documents that could be printed onto paper.

Forgery Laws in California

California’s forgery statute, found in California Penal Code § 470 covers a broad range of activities. In addition to signing another person’s name to various documents without authority, the statute makes it a crime to intentionally “alter, corrupt, or falsify any record of any … conveyance” which includes real estate documents like grants or deeds. Under California Penal Code § 115, a person commits a felony when they knowingly file “any false or forged instrument” with a government agency, such as a county recorder’s office. State law allows county recorders to accept “digitized images, digital images, or both” of a recordable document for filing.

In fact, Section 502(c)(1) prohibits altering or deleting data stored on another person’s computer or computer network as part of “any scheme or artifice to defraud, deceive, or extort.” This can include attempts to falsify or forge digital documents affecting real estate transactions.

If a real estate document filed in the public record is found to be fraudulent, it is void as a matter of law. Even if a person bought real estate in good faith, the presence of forged or falsified documents in the chain of title could invalidate their purchase. For example, a 2012 decision from a California Appellate Court, describes how the sale of a property at a foreclosure auction was void. The previous owners, the court determined, had no idea that someone had recorded a forged second deed of trust, which led to the foreclosure. The buyers at the foreclosure auction had no knowledge of or involvement in the forgery, but a forged deed of trust cannot convey title. So, in essence, that made the foreclosure and the purchase of the property void.

Examples of Real Estate Forgery

Most incidents involving forgery of real estate documents in California still involve fraudulent signatures and forged deeds and other documents used to convey title. Many of these schemes involve the use of computers to create fraudulent documents but the goal is still to get false documents into the public record.

One recent example involved a man’s conviction for forgery and filing a forged document, after he recorded a deed that purported to convey a house owned solely by his estranged wife into his own name. Another recent story involved the use of forged documents to indicate to lenders that outstanding loans had been paid in full. This reportedly resulted in almost $50 million in new loans. The convictions included fraud and aggravated identity theft.

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