Mario Lemons received a note on his front door in 2021 informing him that another person owned the home he had recently purchased. 

The school principal thought they had the wrong address, or that it was a joke. To Lemons’ chagrin, the note was serious. 

An out-of-state investor claimed to own the home and had proof of purchase from two years prior. In the timespan between Lemons’ and the investor’s purchases, someone else had filed a fraudulent document with the county that gave the appearance of a transfer in ownership. Now, Lemons and the investor are involved in court proceedings to determine the rightful owner of the property on the desirable street of West Outer Drive. 

Deed fraud is a scam that housing policy advocates say has gone on long enough. Fraudsters, scammers, and charlatans alike have long filed false documentation with the Register of Deeds, knowing that there was no recourse for property owners and renters who may not have dug up the property’s ownership history. But the scam should subside after Gov. Gretchen Whitmer this month signed two bills into law that create new safeguards for homeowners and renters. Whitmer, in a news release, called the bill package “commonsense, bipartisan legislation,” that will protect homeowners and help everyone “Make it in Michigan.” 

Wayne County Register of Deeds Bernard Youngblood said the laws are sorely needed because scammers have “eroded the integrity of the (Register of Deeds) database.”

House Bills 5598 and 5599 make filing fraudulent real estate documentation illegal with penalties of three to 10 years imprisonment and up to $5,000 in fines. Advocates for the legislation said that renters and seniors were most susceptible in the past, but anyone can fall victim to a real estate scam. 

Real estate fraud is an issue Youngblood has been fighting for years. In 2005, he joined Wayne County Prosecutor Kym Worthy and then-Sheriff Warren Evans to create a  deed fraud taskforce. Since that time there have been over 13,000 inquiries for this type of real estate fraud in Wayne County, according to a Senate Committee summary. Youngblood says Wayne County is a target for housing fraud, given the improving housing costs in Detroit, availability of land contracts, and the high number of seniors. The process of figuring out who is the rightful owner of a property can take months, if not years, and thousands of dollars in legal fees.

In 2020, COVID’s nationwide shutdown encouraged electronic documentation, which allowed homeowners – and fraudsters – to quickly transfer property from one person to another with little verification. 

Youngblood said bad actors reached out to consumers electronically, urging them to participate in get-rich-quick investment scams by purchasing cheap, flippable, property in Detroit. People who may have inherited property, but don’t live in the area were at greater risk of the scam, he said. Youngblood said those individuals are more likely to sign off on quit claim deeds because they want to sell a property quickly and don’t have to be present for the transaction.

The register of deeds said he hopes that the threat of punishment for filing fraudulent paperwork will prevent scammers from financially upending homeowners. 

“Deed fraud is one the biggest scams that our seniors are facing,” State Rep. Tullio Liberati, D-Allen Park, who sponsored the legislation, said in the governor’s news release. “This type of deception can happen to anyone. We are strengthening our laws to deter this criminal activity from occurring. We must continue to find ways to protect Michiganders.” 

A complex paper trail 

Lemons, a longtime Detroiter and principal of a Detroit school, said he’s anxious about the possibility of losing the west side home that brought him so much pride and is within five minutes from his job. 

“Once I finally got to closing I was so relieved to be done and so excited to have my own home,” Lemons said. “I was very happy. And I remember not even having furniture in my living room that first week and just sitting on the floor and looking out the big, bay window like ‘yo, this is mine.’”

A first-time home buyer, Lemons purchased a conventional mortgage through an FHA loan, which required he obtain title insurance. The title insurance company, Speedy Title and Escrow Services, LLC, of Clinton Township, approved the insurance, leading him to believe that there were no unresolved documents or individuals with a potential stake in the property.

However, Lemons said someone from Detroit Renaissance Fund (DRF), a real estate company based in Delaware, left the note on his door not long after he moved in. Lemons says they spoke over the phone, and that he was told that the investment company owned many homes across the country and purchased the house on West Outer Drive with the intention to rehab it and sell it for a higher price.

DRF had proof of a warranty deed, just like Lemons. According to Lemons, DRF even reached out to his title company once the investment company was made aware that Lemons had purchased the house. The pair have been tied up in litigation for several years, including notices of eviction and requests for back rent.

Lemons said he was fearful of what would become of his living situation when a judge ruled in May that DRF was the rightful owner. He questioned how he ended up in this situation, when he had seemingly done everything correctly throughout the homebuying process.

Lemons’ lawyer has filed an appeal. DRF and its lawyer, Aaron D. Cox, declined to comment for this story.

Related:

• Wayne County to hold mortgage and deed fraud townhall for homeowners
• Considering a land contract in Detroit? What buyers should know
• Black Detroiters want in on city housing market

The history of documents that stand between Lemons and Detroit Renaissance Fund reveal DRF purchased the property for $60,000 in 2019 through a warranty deed from Blue Oracle Investments. According to the documents, there was “minimal maintenance” and, at one point during DRF’s ownership, the house was “boarded up.”

A complex paper trail of potential ownership followed DRF’s purchase of the property until Mario bought it in 2021. 

A quit claim deed shows the property was transferred to Horace Shah in 2020; however, it incorrectly lists DRF as a Florida-based company, not Delaware. Months later, the property was transferred to Ronald Parham for $1. After that, a warranty deed shows it was sold for $58,000 in 2020 to Todd Chunn, who, according to court documents, said that at that time “there was no water service on the property, there was not a functioning furnace, and the property was still in poor condition…the building was not liveable.” 

Chunn sold the property that same year for $77,500 to Elevate Investments, Inc., which  claimed to have made $110,000 in property upgrades. Lemons purchased the home from Elevate Investments for $185,000 in 2021. The home is now estimated to be valued at over $200,000.

Lemons said he reached out to Speedy Title just after he received the investment company’s note to understand how the title company could have missed the documentation and transfers in ownership. Then, he left a bad review on Google, but has since worked with Speedy Title’s lawyers to maintain his residency.  

Youngblood said quit claim deeds are “dangerous documents” because they only require a notary signature to prove transaction of sale. He strongly encouraged property buyers to request a warranty deed from a title company because it guarantees that due diligence was done and that the transfer of the sale is legitimate.

Youngblood said that real estate fraud is so pervasive that some title companies now associate specific areas in Wayne County with risk and won’t approve the insurance. Youngblood was surprised to hear that Speedy Title approved Lemons’ purchase when previous documentation showed a quit claim deed was involved in the transaction.

Speedy Title did not return calls from BridgeDetroit.

The Michigan Department of Insurance and Financial Services (DIFS) is the regulatory agency for title companies in the state. In June, a DIFS media representative said that the department does not track data on how often title companies report false or duplicate titles. According to the department, DIFS can investigate fraud claims and revoke licenses or pursue fines against licensed agents or companies selling fake title insurance policies. The state also has an online locator for consumers to look up the licensing status of insurance, financial professionals and companies.

DIFS encourages consumers to use local resources, like the Wayne County Register of Deeds, to protect themselves from scams and to call their local police department to report a crime.

“If there’s a person who goes through typical bank financing and they get a mortgage, that mortgage company always requires, and I would always recommend, that people obtain title insurance,” said Joon Sung, systemic advocacy director at Lakeshore Legal Aid.

Sung said title insurance provides a safety net to homebuyers because title companies assume the damages should there be any documentation issues. Most of the clients Sung works with are renters who need an advocate when they have rented a property through a person or company that doesn’t have legal rights and has most-often forged documents through a quit claim deed.

Sung noted fraud is common in Wayne County due to the number of “unsophisticated buyers” who don’t understand the process or can’t afford to obtain insurance. He said a significant portion of the area’s population can’t afford mortgage financing and resort to land contracts instead, a transaction where banks don’t typically require title insurance.

Sung also said in some cases bad actors know or have a relationship with the true property owner.

“At some point the true owner is going to receive notification, they’re going to receive some strange documents indicating a mortgage transfer for tax reporting purposes,” he said. “When they do receive those types of documents they need to reach out and see what’s happened. Individuals can search their own properties without charge.”

‘Going in blind’

Chase Cantrell, executive director of Building Community Value, said homebuyers don’t always understand the difference between quit claim, covenant, and warranty deeds to protect themselves and their money. 

BCV has a curriculum tailored to help property buyers and investors understand the purchase process, the protections each deed may provide, and the importance of title insurance. Over 1,500 people have taken the free, online course and over 400 people have completed the in-person classes. Cantrell said he recommends that buyers work with experienced, professional realtors and secure an FHA lender that will require a warranty deed and insurance.

According to Cantrell, many buyers with quit claim deeds are “going in blind,” purchasing with cash, and typically aren’t aware of the purchase history of the property. In Detroit, he’s seen the deeds commonly used to pass family-owned properties to younger generations, and, in more formal purchases, through entities like the Detroit Land Bank Authority. 

The land bank said in a statement that there have been instances where fraudulent deed activity has taken place, which the DLBA “believes is a byproduct to the real estate industry.”

“The Detroit Land Bank Authority does not offer education services relative to quit claim deeds,” the statement adds. 

Cantrell suggested renters inquire about who they are renting property from. He said it’s in the interest of any city for the majority of its properties to be owned by residents. BCV conducted a landlord survey in 2022 that revealed most landlords in Detroit are residents and that changes to the city’s rental ordinance have supported in-town ownership. 

As far as what’s considered fair among situations between Detroit residents and out-of-town investors purchasing property in the city, Cantrell said there’s a strong desire in Detroit for property owners to be involved in the community. 

“I think a lot of people will say ‘they’re (out-of-town investors) not involved in the community. We don’t know who these owners are, they don’t care about the future of the community, they don’t care if gentrification or displacement happens.’ They’re only looking at their bottom line without any other connection to what happens to the community that they’ve decided to invest in,” Cantrell said. “And any city that wants to inspire homeownership is for the opposite reasons, right? You want people to feel connected to a place.” 

A Wayne County judge decided in May that Detroit Renaissance Fund should hold ownership of the West Outer Drive home. Lemons’ legal team contested the decision and the appeals process is expected to resolve in April of next year. Lemons said he didn’t know this type of fraud existed and was “crushed” after the decision. 

“I am still very disappointed, frustrated and somewhat anxious to see what the outcome is going to be,” Lemons told BridgeDetroit in November. “Early on in the process I put a lot of faith in the lawyers. (I thought) surely they aren’t going to take my home.” 

He said he isn’t convinced that the situation will resolve in his favor and Lemons said he’s saving money in case he’s forced to move in the spring. Known as a “ride or die Detroiter,” Lemons said he felt immense gratitude to be able to work and purchase a home in the city. 

Lemons said this situation however may lead him to reconsider purchasing property in Detroit in the future. He’s learned how bad actors can take advantage of people and encourages other buyers to be thorough in the homebuying process. 

“You can go through the whole process with a warranty deed and title insurance and still be a victim,” he said. “And it’s not something that you did wrong…I hope people do their due diligence and ask a bunch of questions.”