On September 8th of this year, a cyber-attack orchestrated by a hacking outfit calling themselves Blackcat managed to shut down government servers in Suffolk County for approximately a month. The attack, which disabled county websites, servers, and databases, made it impossible to verify property titles or file records with Suffolk County. Verifying titles is necessary for banks and buyers to determine if there are liens against a property or if the seller is a legitimate and sole owner. Ultimately, this prevented most transactions from going through, and the effect on real estate, particularly for first-time buyers, has been significant.
Though the county seems to be working towards recovery of its systems, it has been a slow-going process. The convenience of remote access, granted out of necessity during the pandemic, remains out of reach for the time being, with searches being conducted in-office until officials can ensure the system is insulated against future attacks.
For buyers, the consequences of delayed closing are serious since they typically try to lock in mortgage rates early in the process of purchasing a property. If the sale doesn’t close by the time the rate lock expires, they can be forced to buy at a higher rate. Worst case scenario, they don’t even qualify for the mortgage at the higher rate or won’t pay it, and the sale falls through.
“The magnitude of this hack is unprecedented, and it has impacts across the board,” Suffolk County Comptroller John Kennedy said in a recent interview with The Star. While the mass system shutdown has affected real estate transactions across the county, Mr. Kennedy suggested that “the impacts you are seeing out there is that it’s very cruel that anybody — particularly a first-time homebuyer who might have had a favorable mortgage commitment, may have seen that come and gone.”
Agents and attorneys did what they could to mitigate the circumstances. Some resorted to closing deals by having sellers sign paperwork affirming no new liens or judgments against the property since the preliminary title report stage of the selling process. Some sellers even put money in escrow accounts to push deals along. However, even months later, systems are still behind.
In an article in the Easy Hampton Star, Chris Nuzzi, executive vice president and regional director for the firm Advantage Title, advises “that the next phase in restoring real estate services provided by the county is for it to get caught up on transactions that have taken place during the shutdown, via the Suffolk County Real Property office, which maintains the county property tax map. Documents associated with real estate transactions must be verified against the tax map before a transaction can proceed, said Mr. Nuzzi. Until that happens, it appears that first-time homebuyers are the biggest victims of the Suffolk County shutdown.