- Illinois County Recorders May Now Investigate Fraudulent Documents
- September 26, 2013 | Author: Carolyn Artus
- Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Chicago Office
On July 19, 2013, the Governor of Illinois signed a new law to combat property fraud, effective immediately.1 The law provides that a county recorder may establish a "fraud referral and review" process for deeds and instruments that the county recorder reasonably believes may be fraudulent, unlawfully altered or intended to cloud or illegally transfer title of any real property. The county recorder may contract with local law enforcement officials or request assistance from the Secretary of the Illinois Department of Financial and Professional Regulation in reviewing possible fraudulent filings.
The law enumerates nineteen factors that the county recorder may consider when determining whether to refer a document for fraud review. Some of those factors relate specifically to foreclosures. For example, the county recorder may consider:
- Whether the documents are protesting or disputing a foreclosure proceeding that are not filed within the foreclosure suit and with the court presiding over the matter; and
- Whether the documents are claims that a bank cannot hold title after a foreclosure.2
If the county recorder reasonably believes that a document is fraudulent, the law requires that he refer the matter to a county administrative law judge (ALJ) for adjudication. Upon referral, the ALJ conducts an investigation and may declare a document void, if clear and convincing evidence supports a finding of fraud, and therefore of no affect on the chain of title.
Critics of the law point out that the county recorder is not subject to liability due to any error or omission in the performance of the duties related to the fraud review and referral process, which could potentially lead to corruption.3 Others raise due process concerns and the inadequacy of the resources that an ALJ will have to prosecute a claim of fraud.4
Given that the law is silent on the issue of how the county recorder will fund a fraud referral and review process, it will be interesting to see how many county recorders will avail themselves of this new power.
To see a copy of the new law, go here: http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0099
1 Illinois Public Act 098-0099; 55 ILCS 5/3-5010.5
2 55 ILCS 5/3-5010.5(c) (8) and (12)
3 55 ILCS 5/3-5010.5 (i); Adam W. Lasker, "County recorders can investigate fraud, bill provides," Illinois State Bar Association Law Pulse, July 2013.
4 Adam B. Whiteman, "No good deed goes unpunished: HB 2832 will imbue the county recorder with unprecedented powers that will wreak havoc on real estate transactions," Illinois State Bar Association, Real Property, May 2013, Vol. 58, No. 10