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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast

Buying a bad deal is one thing.

Buying a building from someone who never actually owned it is a completely different level of problem.

In this episode, Mark sits down with Tom Shallcross to unpack a real Chicago title fraud situation that tied up Tom’s money, his lender, his title company, his partner, and more than a year of time. The deal looked normal. The price was not too good to be true. The seller negotiated. The closing happened at a real title company. The deed looked recorded. Then, two weeks later, Tom got the call no investor wants to get: you don’t actually own this property.

This is one of those episodes every Chicago real estate investor should hear, especially if you buy vacant buildings, abandoned properties, land, or distressed properties. The scary part is not just that the fraud happened. The scary part is how normal everything looked until it was too late.

Questions We Answer in This Episode

Q: What’s the housing provider tip of the week?
A: Clean out exterior drains before heavy rain. If drains near garden units, basement entrances, laundry rooms, gangways, or rear stairwells are clogged, water can back up into doors, walls, or foundations.

Q: What happened to Tom Shallcross on this deal?
A: Tom bought a vacant West Town building from an LLC that appeared to own it, but the prior deed was fraudulent. The scammers had created a fake transfer months earlier, let it sit in the public record, then resold the property.

Q: Were there obvious red flags before closing?
A: No. The deal was not cheap enough to feel suspicious. The seller negotiated normally, the closing happened through a real title company, and the property matched the kind of distressed project Tom usually buys.

Q: How did the title fraud work?
A: The scammers appeared to impersonate the original owner, transferred the property to an LLC, recorded the deed, waited several months, then sold from that LLC. On paper, the chain of title looked normal.

Q: How was the fraud caught?
A: After closing, the sellers started making repeated withdrawals under $10,000 from a BMO account. A teller flagged the activity, BMO contacted Fidelity, and Fidelity started digging into the transaction.

Q: What did title insurance cover?
A: Tom’s owner’s policy covered the money shown on the settlement statement, including his down payment. Renovo also had a lender’s policy. The biggest issue was anything paid outside of closing.

Q: What money did Tom have tied up?
A: Tom had roughly $230K to $240K tied up between his down payment, early project costs, insurance, attorney work, architect work, board-up costs, and other expenses.

Q: What did Tom not recover?
A: He recovered most of the money, but he did not recover the $10K paid outside of closing to a wholesaler. That became one of the biggest lessons from the entire situation.

Q: Why does Tom now care so much about the settlement statement?
A: Because if a fee or payment is not on the settlement statement, it may not be covered by title insurance. Tom’s takeaway is simple: put every assignment fee, credit, reimbursement, and side payment on the settlement statement whenever possible.

Q: What is the biggest lesson for Chicago investors?
A: Title fraud can happen even when everything looks normal. Be extra careful with vacant buildings, abandoned properties, land, and tax-delinquent properties. Strong title coverage, clean documentation, and lender relationships matter when something goes wrong.

Show Notes

01:30 Housing provider tip: clean exterior drains before heavy rain damages basements, garden units, or foundations
02:08 Tom explains the fraud story: buying a building from someone who did not actually own it
03:05 Why the West Town deal looked like a normal distressed Chicago investment opportunity
07:30 How the title fraud scheme worked and why the fake deed looked legitimate in public records
14:13 How BMO flagged suspicious withdrawals and helped uncover the fraud after closing
17:14 Fidelity tells Tom he does not own the property and opens a title claim
19:30 How title insurance works and why the owner’s policy and lender’s policy mattered
26:05 The unpaid taxes, tax buyer, and failed attempt to still get Tom the building
33:57 Someone claiming to be the original owner redeems the taxes at the last minute
46:38 Tom’s biggest takeaway: put every fee and payment on the settlement statement

Takeaways for Chicago Property Managers and Landlords

Clean exterior drains before storms, especially near garden units and basement entrances.
Title fraud can happen even when the transaction looks normal.
Vacant buildings, abandoned properties, tax-delinquent properties, and land are higher-risk targets.
Title insurance matters, but title claims can be slow and frustrating.
Make sure the owner’s policy and lender’s policy are in place.
Pay close attention to endorsements tied to chain of title.
Put every fee, assignment fee, reimbursement, and side payment on the settlement statement whenever possible.
Be careful paying wholesalers or middlemen outside of closing.
Strong lender and attorney relationships can help keep a bad situation from becoming worse.
The hidden cost of fraud is not just money, it is time, liquidity, stress, and mental bandwidth.

Guest info

Guest Name: Tom

Guest Company: City of Chicago 44th Ward

Guest Link: https://www.44thward.org/

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We understand that every investor’s goals are unique, and we love learning about each client’s individual needs. If there is an opportunity to help you buy back your time by managing your rental property or finding quality tenants, please check us out.

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