cyber security

Cybersecurity Threats and Their Impact on Real Estate Transactions

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Imagine arriving at your real estate closing only to learn that the county’s property records are unavailable. If the documents can’t be recorded, then the transaction may be left hanging in the air. Depending on lender funding requirements, the closing attorney may not be able to disburse the funds, and the buyer may not be able to receive their keys until recording is available. It sounds far-fetched, but it’s exactly the type of disruption that recent cyber-attacks on county governments have made possible.

Most people never think about their county recording office until they’re buying or selling real estate. Deeds, mortgages, easements, plats, liens, and other documents are quietly recorded every day, creating the public record that establishes who owns property and what interests affect it. It’s a system that has worked for generations because it relies on one simple principle: the public records must be accurate, complete, and accessible.

Recent events in South Carolina serve as a reminder that this system is more fragile than many people realize.

A recent cyber attack disrupted access to property records and other county services, temporarily preventing normal operations. While the details of the investigation continue to emerge, the incident highlights just how dependent modern real estate transactions have become on digital access to public records. Unfortunately, this is not an isolated event. Several South Carolina counties have experienced technology failures, ransomware attacks, or other disruptions in recent years.

Cyber security, however, is only one challenge facing county recording offices.

Many counties across the state operate with limited budgets and skeleton crews. Employees often process hundreds of documents each day while balancing increasing demands and aging technology. Even the most dedicated public servants can struggle when resources are stretched thin. Under staffing and insufficient training increase the likelihood of recording errors, indexing mistakes, or delays in processing documents – all of which can create headaches for property owners years later.

The integrity of the public record is essential because virtually every real estate transaction depends on it.

Before issuing title insurance, conducting a closing, or approving a mortgage loan, attorneys and title professionals examine the public records to confirm ownership and identify any issues affecting the property. They are looking for deeds that properly transferred title, unreleased mortgages, judgments, tax liens, easements, restrictive covenants, and countless other matters that could affect ownership rights.

If those records are unavailable because of a cyber attack, the transaction may be delayed. Buyers may not be able to close on schedule. Sellers may miss contractual deadlines. Lenders may refuse to fund loans until title can be verified. Even a short interruption can create significant inconvenience for everyone involved.

More concerning are situations where records have been altered, corrupted, or improperly indexed. The public recording system functions because people can trust that what they find is complete and accurate. Preserving that trust requires not only secure computer systems but also adequate staffing, proper training, and ongoing investment in the offices that maintain these records.

Although county governments bear much of the responsibility for protecting these systems, cybercriminals often gain access through surprisingly simple methods.

Many cybersecurity incidents begin not with sophisticated hacking tools but with social engineering. Rather than attacking computers directly, criminals manipulate people into providing passwords, opening malicious attachments, or clicking fraudulent links. These phishing emails are designed to look legitimate and frequently impersonate trusted organizations, coworkers, financial institutions, or government agencies.

While this blog focuses on real estate law, cyber attacks and scams aren’t limited to real estate transactions. Anyone, not just government employees, can become a target. A few simple precautions can dramatically reduce the risk of becoming a victim. Be cautious of unexpected emails requesting urgent action. Verify unusual requests through a separate phone call or trusted contact information rather than responding directly to the email. Avoid opening attachments or clicking links unless you are confident they are legitimate. Enable multi-factor authentication (“MFA”) whenever possible, and keep software updated to address known security vulnerabilities.

These habits protect more than your personal information. They help protect the institutions that communities depend upon every day.

County recording offices rarely make headlines when everything is working properly. Yet they perform one of the most important functions in our legal system by preserving the history of property ownership and ensuring that buyers, sellers, lenders, and attorneys can rely on the public record.

As counties continue modernizing their technology, cybersecurity must remain a priority. At the same time, we should not overlook the importance of investing in the people responsible for maintaining these records. Secure systems, well-trained staff, and accurate public records are not simply administrative conveniences: they are essential to protecting property rights and keeping South Carolina’s real estate market functioning smoothly.

Wire fraud continues to be a significant problem

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My preacher has suffered several email hacking schemes that prey on church members with kind hearts.

He has sent out a written notification and has announced from the pulpit more than once that church members have reported to him that they sent money because of his very touching email requests about persons in need…email requests that he never made. He assured his congregation that if he needs specific funds for specific needs, he will make phone calls. He shared that preacher friends of his have reported similar schemes. The fake emails always report that he is unavailable to take phone calls but that the need is urgent and immediate.

Phone calls may be the key to fraud prevention!

A lawyer friend of mine called me this week to ask an opinion on a potential client’s case. Help me answer the question: Does a closing attorney have a duty to make a telephone call to clients who may need to wire funds in connection with a closing to warn about the dangers of wire fraud and how to prevent the loss of closing funds?

I don’t know the answer to that question. My gut reaction is that the standard in our communities in South Carolina is that lawyers should provide very specific instructions on wiring instructions and engagement letters to prevent this type of fraud. I’ve seen several excellent examples of red-letter, bolded warnings.

Chicago Title in South Carolina continues to see a rise in the amount of fraud and attempted fraud in connection with real estate closings. The most recent memorandum was sent out to agents on February 2. Most of these incidents involve hacked emails where a party to the transaction fails to maintain strong computer or email security.

Unfortunately, law firms with significant security measures in place have also been victims of these schemes. The hackers typically submit altered payoff letters or wiring instructions to divert the funds. Like the emails that have plagued my preacher, the forged emails, wiring instructions and payoff letters look very similar to legitimate documents.

Here is the current advice on preventing these disasters in your law firms:

  1. Obtain payoff information and wiring instructions early in the transaction so that there is ample time to review them and confirm their authenticity.
  2. Review every payoff and wiring instruction to determine whether it appears authentic on its face. Many fraudsters are excellent at spoofing letterheads and logos, but sometimes, you may see tell-tale signs.
  3. Compare each payoff letter and wiring instruction to prior instructions to determine whether account numbers have been changed.
  4. If the wire is going to an entity to which you have previously sent wires, compare the new information with the prior transaction. If you save wiring instructions in your systems, make sure that repository is secure and cannot be easily shared.
  5. Verify every wiring instruction verbally using a known and trusted telephone number. Do not use telephone numbers provided in the instructions themselves unless you can verify its validity.
  6. If you cannot verify the instructions verbally or have doubts about the transaction, consider mailing, overnighting or even hand delivering a check to a confirmed address instead of using a wire.

Chicago Title has developed an excellent APP for your cell phone that contains the information you will need in the event your law firm or your clients become victims of fraud. As always, I highly recommend Chicago Title!