A couple years ago, Gina Leto, a real estate developer, bought a property with her business partner. The process went like it usually did: Lots of paperwork; a virtual closing. Pretty cut-and-dry. Gina and her partner started building a house on the property.But $800,000 into the construction process, Gina got a troubling call from her lawyer. There was something wrong. At first, Gina thought the house had burned down. It turned out that the situation was... maybe worse.On today's show: Buying land seems pretty secure, right? There's so much paperwork and verification along the way. But a messy system of how titles are sold, transferred and documented makes a perfect entry point for a new kind of criminal: Title Pirates.Today's episode was hosted by Erika Beras and Jeff Guo. It was produced by Sam Yellowhorse Kesler. It was edited by Liza Yeager. Fact-checking by Sarah McClure. Engineering by Valentina Rodríguez Sánchez. Planet Money's executive producer is Alex Goldmark.Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy
Chapter 1: What is the story behind Gina Leto's property investment?
This is Planet Money from NPR. Gina Lito is a real estate developer. She buys properties, builds houses on them, sells them. And she's pretty hands-off about all the paperwork. She has her lawyer handle that stuff.
The lawyer comes, I give him the money, and he will close. And he will call me and say, it's closed, it's yours.
So impersonal.
Yeah, it is. I've never met any of the sellers of the properties we have bought.
Gina and her business partner have bought eight properties in Connecticut, where they live. And then, two years ago, she found her ninth.
A realtor came to us and said, there is a piece of land for sale. It's been in the same family for many years. Did you go see the property? So I drove by, but it was just an overgrown lot at the time. An overgrown lot.
Now, even though she's pretty hands-off, every time Gina buys property, she does her due diligence. Like, is the land flat? Are there any wetlands? She and her partner look at zoning, boundaries, that kind of thing. And of course, with this new property, she checked out the owner. She wanted to have an idea of who she was doing business with.
It's more out of curiosity than anything. But obviously, if you found out, you know, the person was, I don't know, a gangster or something. I don't know if I'd want to buy a property from them. So silly things like that. And when I Googled, I found the name on the documents. The correct address was there. He seemed like a normal man and everything seemed fine. And That was it.
So they do all the paperwork, use their real estate agent and attorney. They close the deal the way they always do, totally virtually. They paid $350,000 and got to work building a very nice house.
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Chapter 2: What went wrong with Gina Leto's house construction?
Our lawyer told us that the person that sold the property to us was not the owner. This was a fraudulent sale. The real owner never sold this property and was unaware that the property was sold You know, right away you think, well, how can this happen?
Hello and welcome to Planet Muddy. I'm Erika Barris.
And I'm Jeff Guo. How we buy it, how we sell it seems so secure. All that money, all that paperwork, all the dotted lines to sign, and so many people checking to make sure that it is all airtight.
But there's this one part of that system that is a bit more hodgepodge than you'd really want it to be. The way we track who owns a property, who has a title to it, and there's a whole new kind of villain trying to exploit that system. Today on the show, the wild world of title insurance.
Weird proprietary land ownership maps, disconnected registry systems, the tragic loss of historic apple trees, and title pirates. So Gina Alito had paid $350,000 for a piece of land. Then she spent nearly a million dollars constructing a brand new house on that piece of land. And now she had gotten a phone call that the person she had bought that lot from was not actually the owner.
She and her business partner had to stop construction of the house. Technically, they were trespassing.
I was very nervous. I was scared. I had a very sick feeling in my stomach. I just kept saying, so what happens now?
And we're just going to pause Gina's story here because we need to tell you a story about the same parcel of land. From another perspective.
Now, this other story is about a guy named Daniel Kenigsberg. Nowadays, he's a super successful doctor. But way back in 1953, he was just a baby. And in those post-World War II suburban boom years, his dad built a house in a Connecticut suburb where Daniel and his brothers grew up.
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Chapter 3: How does the title transfer process work?
And, you know, technically, a regular person could piece together all this information themselves.
Like, can any of us do it? It's not as easy as it sounds. It's not as if you look up your parcel of land and see who owns it. What you have to do is look to see, all right, when did my seller acquire title? From whom? Did that person acquire title from somebody else? Maybe there was a death and you'd have to look at probate records. You have to make sure that there are no outstanding mortgages.
And that's a lot of searching. It's a lot of work for an ordinary person to do.
And all this stuff is really high stakes. Like, if there's a partial owner to the property, that person may come knocking on your door and they're going to have rights. Or if a seller actually took a loan out on that property they sold you and then never paid it off, that bank is going to come find you. Or the lot you purchased for your community garden actually has years of unpaid taxes on it.
Oops, that's on you now.
So, essentially, in the United States... The only way to know who really owns what is to piece together a bunch of receipts. And all of those receipts are held in different places that are organizing them differently. And if you don't have complete information about the property you're buying, there can be huge consequences.
This seems like a little bit of a, for lack of a better word, a janky system, what you just described.
Well, it is to some extent, but it's a system that we've had for decades. couple hundred years.
This is a very American problem. A bunch of decentralized systems that are kind of messy. And it creates a bunch of risk for anyone trying to buy a property. But there's also a very American fix for this problem. A market solution. Title insurance.
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