A spelling error small enough for even a careful reader to miss, on a land deed filed more than a decade ago, might have halted the property sale fraud that’s causing a stir in Fairfield with a $1.5 million house in dispute.
But like that house built on the very same parcel at 51 Sky Top Terrace, no one caught the mistake before a developer unwittingly bought the property from a sham seller for $350,000 last October and spent months and hundreds of thousands of dollars more. Or maybe someone did catch the glitch before the sale and didn't act on it.
Either way, the seemingly tiny error on a deed for the land brings to light a largely hidden step in the sale of real estate -- title searches -- and raises the stakes on a controversy over how they should be done. Jacqueline Purcell, president of the title searchers association in Connecticut, sees the error -- a typo, basically -- as a big deal that speaks volumes.
There for all to see, or more likely, to gloss over, is the 2010 "trustee deed" in which a family trust granted full ownership of the wooded, 0.45-acre lot to Daniel Kenigsberg, who was already part of the trust.
“Know ye, that DANIEL KENIGSBERG, Co-Trustee of the ESTHER S. KENIGBERG TRUST, dated Oct. 7, 1991, and SAMUEL L. BRAUNSTEIN, Successor Co-Trustee of the ESTHER S. KENIGBERG TRUST...do grant, bargain, sell and confirm unto the said DANIEL KENIGSBERG, all right, title, interest, claim and demand..."
Did you catch the error? “Kenigberg” in the name of the trust should be spelled “Kenigsberg,” with an s in the middle. I missed it when I read the same document as I reported my July 30 column on this odd case, possibly the only one in the United States in which a house was built on land purchased by a sham seller.
'I would have marked it as defective'
Purcell believes the spelling error should have set in motion events that would have revealed the fraud.
"Absolutely without a doubt any professional title searcher would have caught the fraud," said Purcell, who founded a firm in the early 2000s that is now known as Fusion Title Search, now owned by her daughter, Alexa Pedrinelli. "This is really sloppy."
A title search, basically a check of property records showing ownership, liens and other legal issues connected with a parcel, is the way to show that a buyer is obtaining "clean" title, or rights. It's usually required by a title insurer, which issues policies to protect an owner against challenges.
We don't know who did the title search in 2022 for the parcel at Sky Top in this case. We don't know which company provided title insurance and the buyer's attorney did not return my calls seeking comment Tuesday. Samuel Braunstein, the Kenigsberg trustee, was not available for comment.
Purcell explained:
"I would have put it on my report and I would have marked it as a defective title because of the misspelling…It would have made them do a name affidavit at closing or they would have had to do a corrected trustee deed. In either case they would have had to contact Samuel and Daniel and the correct Daniel would have been notified and he would have said, ‘How did this come about?’ And they would have said 'You’re selling it' and he would have said 'No, I am not.’”
Purcell, of Branford, says the rise of online-only title searches leads to slipshod work, some of it done by offshore vendors at a super-low rates, which she believes puts real estate transactions at risk. We don't know whether the search in this case was in-person or online.
She wants Connecticut to add title searchers to the more than 100 professions now certified, licensed or registered by the state -- and that debate is likely to come up in the 2024 legislative session. "People don’t realize that title is mostly about the title searcher and the title searcher’s ability to do the search," she said.
That could be one of the reforms the state adopts to fight the rising tide of "seller impersonation fraud" in real estate deals.
Not an illegal deed
Certainly a lot of headaches would have been avoided if that error had revealed the Fairfield scam, the subject of a federal lawsuit with at least one more court action on the way. But, lawyers and the Fairfield town clerk said, it's not clear the glitch should have raised a red flag at all.
For starters, Town Clerk Betsy Browne told me Tuesday, the name of the Kenigsberg Trust is spelled correctly on the signature page -- and that's what really counts as far as she is concerned. Sometimes an error in the body of a deed may be corrected and initialed, or it remains as an error and that's not what anyone wants to see but the signature page is the standard.
Purcell says the standard for title searchers is different and would include the body of a document. But there's another factor that could make this glitch a non-legal issue.
"She's overlooking the curative statute," said John Heffernan, a longtime real estate lawyer in West Hartford and Old Saybrook.
The what? That's when state lawmakers, every few years, adopt a measure that says, basically, harmless typos and obvious errors on certain legal documents do not void those documents. You're still married if your marriage license missed your second middle initial. "It’s my belief that the curative statute would have taken care of it," Heffernan said, in the Sky Top Terrace case.
Heffernan said, and two other lawyers agreed, that it's possible a title searcher did see the spelling error and let it pass, knowing the property was still in its rightful hands, at least until the scam in 2022.
"I’m not sure even if they saw it that they should have put it in as a title requirement," said James Marx, a Miami lawyer who is head of the mortgage committee for the American Bar Association."
A state license for title searchers?
Purcell disagrees that it wasn't a big deal, as a self-styled stickler for the law. One reason for that: She pled guilty in 2012 to committing mortgage fraud in 2009 and spent seven months in Danbury federal prison after a sentence of one year and one day.
Today she speaks widely with people affected by the criminal justice system and helps women who committed white-collar crimes with post-prison re-entry, through her company, Evolution Re-Entry Services and her podcast, Criminal Justice Café.
"It’s reckless and I know reckless because I regret every day of my life when I was," said Purcell, who was recently told she will be inducted into the Connecticut Hall of Change, which honors people on a journey to redemption through social change after they were incarcerated.
Besides, she said, some real estate records such as certain liens aren't even online and are missed by remote searches; and some larger cities tend to have less complete digital records. It's not clear to me whether this is an emerging issue we need to worry about.
"I agree that the electronic title searches, whether it’s somebody from Bangladesh or somebody here, are not as reliable as title searches in-person," said Heffernan, the West Hartford lawyer. But he added, "I haven’t noticed that as a major problem."
"They occasionally make mistakes but I think overall the title underwriters are very good," Marx, the Miami lawyer said.
Licensing would be no simple change. How would the state license title searchers overseas and regulate remote searches?
Purcell's push for licensing might make sense, state Rep. Kerry Wood, D-Rocky Hill, co-chair of the legislature's Insurance and Real Estate Committee told me Tuesday. "It’s definitely in our wheelhouse...to explore this," said Wood, who's in commercial real estate. "I think we’ve seen a lot of sloppy work."
In the end, the error is unlikely to become a legal issue but it still might have stopped the scam. "Most of these frauds are caught by some coincidence somewhere," Marx said. "Someone calls someone."
dhaar@hearstmediact.com
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