Computer System Breach Crippling USVI Real Estate Transactions

A screenshot of the Recorder of Deeds website, where no meaningful property transaction documents appear to have been entered since March 22, according to a search of the site. (Screenshot)

Amid a real estate boom not seen in the U.S. Virgin Islands since 2008, the Recorder of Deeds computer system – where all property documents and transactions are logged – appears to remain effectively crippled since it was hacked the week of March 21.

Adding to the woes, the Recorder of Deeds and Cadastral Division of the Lt. Governor’s Office on St. Thomas was closed during the week of April 12 after an employee tested positive for COVID-19. The office was slated to reopen on Tuesday, according to a press release, but a telephone message on Wednesday said it was closed.

Contacted for comment by phone and email on Wednesday, Shayla Solomon, special assistant for public affairs at the Lt. Governor’s Office, responded by email stating, “Please find attached press releases that were previously issued regarding both inquiries.” The first, dated April 16, was the brief announcement of the office closure due to COVID-19. The second, dated March 15, announced the breach of the Recorder of Deeds computer system.

The Source published both releases when they were first issued. Solomon did not address in her email on Wednesday questions about when the computer system might be restored or when the St. Thomas office will reopen.

A lack of regular updates on the issues has left many in the industry frustrated and lost as to how to continue with pressing real estate transactions, said two St. Thomas attorneys.

A search of the Recorder of Deeds website shows that the last meaningful entries, where actual documents are available for viewing, were made on March 22. In the mix are entries dated April 6 to 9 that have no information associated with them and are listed as “VOID.”

In the meantime, all official documentation concerning time-sensitive real estate transactions – everything from deeds, liens and probate matters to refinancing, sales and transfers – is piling up.

The computer hacking problem is twofold, said attorney Leigh Goldman. Not only can the Recorder of Deeds and Cadastral Division not update filings in real-time, but it also cannot search records or has an extremely limited ability to search records, he said.

“All of these actions are brought to a standstill,” said attorney Ruth Ann Magnuson. “It definitely gums up the work.”

In the meantime, the office is accepting documents in the order they were received, to determine the order of recording when it does resume, said Goldman.

The repercussions are many, said Magnuson and Goldman, from blown refinancing deadlines at a time when interest rates are historically low and property values climbing, to lien confusion, estate planning delays or possible gaps in titles that will cast doubt on the records.

“You can’t have gaps in a title,” and with files not being recorded, there is a potential for mischief or accidental loss of records, said Goldman. “You think you have satisfied all liens, but there could be a lien on the property right behind yours in the files – it’s not on record, but in a pile.”

Magnuson, who had about 15 property closings scheduled this week, said the repercussions are also personal, especially for first-time homebuyers. Individuals who have signed their loan documents, wired the money and given up the lease on their apartment, now could find themselves homeless, she said.

“It’s a whole dance of trying to get things ready for a closing,” said Magnuson.

Then there are the broader financial implications not just for the real estate community – everyone from agents to brokers to title companies who are waiting to get paid – but also for the government, with Magnuson estimating that there are hundreds of thousands, perhaps millions of dollars, in checks not cashed for fees and taxes associated with the delayed property transactions.

“There’s a whole industry affected by this because all of a sudden their whole income stream is off,” said Goldman. “For lack of a better analogy, it’s like slamming the brakes on your car in the middle of a freeway,” he said. If you don’t cause an accident, you’re certainly going to create a traffic jam.

“You’re talking a high impact on the community,” said Magnuson, during a pandemic year that she said has been the most active for real estate since 2008. “We’ve been very, very busy. There are a lot of people reevaluating where they need to live to do their work,” she said.

But at the heart of their concern is the lack of communication from the Lt. Governor’s Office.

“First of all, we don’t know if they have solved the issue of the breach of the system,” said Magnuson. “As busy as we are, it is really crazy.”

“I don’t think the real estate community is upset with the employees over there at all,” said Magnuson, echoing Goldman’s sentiments, with both giving high praise to those who work in the office.

“It’s the lack of communication – it’s that nobody is driving the boat,” said Magnuson. “We keep joking – what is the next disaster going to be?”

“We’d like to have more regular updates,” said Goldman.

The March breach of the Recorder of Deeds and Cadastral Division computer system is not the first for the government of the U.S. Virgin Islands. The V.I. Police Department suffered ransomware attacks on its system in April and June 2019, the V.I. Water and Power Authority got caught in an email scam in 2018 that resulted in wire transfers of $2.17 million to thieves posing as legitimate vendors and in November 2019 WAPA reported a cyberattack on its payment processing application that gave hackers access to credit and debit card information.