Could a Cyberattack Cripple Real Estate Closings in South Florida?

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What do real estate closings have to do with international cyberwar? It turns out they are indeed linked, as the residents of Baltimore trying to buy or sell their homes in recent months have discovered.

Could such a cyberattack disrupt real estate closings here?

Buyers and sellers don’t realize how dependent real estate closers like myself are on official county and city records. When a real estate contract is signed by our client, one of the first things we do is check with the county public records.

We’re looking to see who legally owns the home, what the taxes are, and whether there is a mortgage on the property. Only the official public records database has this information, which can be relied upon by a closing agent. All of these facts help the buyer and seller have a smooth and easy closing.

Without this information from the public records, however, no closing agent can finalize a real estate transaction. For example, if we can’t verify that the person signing the contract is indeed the legal owner, that person can’t sign the closing documents or have the proceeds from the sale dispersed to him or her. If we can’t see whether a mortgage exists and who owns it, how can we know whom to pay it off so there isn’t a lingering mortgage lien? And the proration of taxes for the year can only happen when we get official tax figures from the county records.

Then there are public documents closing agents’ access from a city if a property resides in one. These include whether the water bill is fully paid and whether there are any city liens on the property.

(Checking with a city for liens, unfortunately, is something many title companies do not check for. Buyers should insist that the city lien records are searched, so they don’t learn of an unhappy surprise after they close, such as that they owe hundreds of dollars in back water bills. This lack of checking for city liens is one of several reasons buyers are typically better protected when they use an attorney instead of a title company or their closing.)

Imagine if all of the crucial county or city records real estate closers rely upon were suddenly inaccessible. This is something people in Baltimore and in other cities and counties across the US, including in Pennsylvania and Texas, don’t have to imagine, because it is something they have dealt with recently.

The problem in Baltimore started in early May 2019. That’s when a computer program called EternalBlue, developed by the US National Security Agency but hacked by international criminals in 2017, infected the city’s computers.

Many government websites and emails were suddenly frozen, including those involving public real estate records. Whoever infected the city’s computers with EternalBlue demanded a ransom to unfreeze the files. Following most ransomware experts’ advice, the city did not pay this ransom, since other communities or businesses who over the years have paid even very pricey ransoms frequently do not find the malware is released.

Here’s what the New York Times wrote about the Baltimore situation.

“The Baltimore attack, on May 7, was a classic ransomware assault. City workers’ screens suddenly locked, and a message in flawed English demanded about $100,000 in Bitcoin to free their files: ‘We’ve watched you for days,’ said the message, obtained by The Baltimore Sun. ‘We won’t talk more, all we know is MONEY! Hurry up!’

Today, Baltimore remains handicapped as city officials refuse to pay, though workarounds have restored some services. Without EternalBlue, the damage would not have been so vast, experts said. The tool exploits a vulnerability in unpatched software that allows hackers to spread their malware faster and farther than they otherwise could.”

Although South Florida governments have not seen problems with EternalBlue, the issue of cyberattacks is only growing. According to Florida International University, data breaches have increased at a whopping rate of some 47 percent a year. In one year alone, FIU says, there were 662 data breaches, a category that includes ransomware.

Once they were alerted in 2017 that the flaw in their software allowed for this breach, Microsoft issued a security patch to prevent EternalBlue from working. But experts say the problem in many American cities and counties is that the tangle of computer networks they employ typically use out-of-date software. And of course, in addition to EternalBlue, there are many other malware programs out there, not all of which even have patches.

What does all this mean?

It means that while today’s delays in real estate closings in South Florida generally involve mundane issues like clearing up liens, it is possible that one day your closing agent may say your deal cannot be closed because they can’t get into an infected county’s or city’s records. And they will have no idea whether it will be days, months, or longer until the problem could be resolved.

Real Estate Attorney Coral Springs

Have the Law Office of Gary M. Landau by your side. The Law Office of Gary Landau is located in Coral Springs, Florida, and is rated 10 out of 10 by the legal website AVVO. For more information or free phone consultation, call 954-979-6566 or email us. Attorney Gary Landau personally returns all calls to him.

Law Office of Gary M. Landau P.A.
7401 Wiles Road, Suite 204
Coral Springs, FL 33067

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