A hack that shut down Suffolk County government servers over 20 days ago has crippled the local real estate industry.
The cyberattack has disabled access to county websites, servers and databases since Sept. 8, making it impossible to verify property titles or file records with the county. That, in turn, has stopped most transactions from going through.
Corcoran broker Sheri Winter Parker said confusion over the situation and when it might end means “my phone is ringing with nonstop texts and emails.”
A hacking group known as BlackCat has claimed credit for the attack and demanded payment to restore access to government servers, according to The Suffolk Times. The hackers claim to have stolen four terabytes of data, including on individual residents, much of it from the clerk.county.suf domain.
County officials have resorted to accepting some records in person, but online databases remain out of reach. County email addresses are also offline. That’s caused massive disruption for brokers, lawyers and title companies, not to mention buyers and sellers.
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“Real estate transactions are on hold,” said Michael Gulotta, founding partner of Gulotta & Gulotta, a Ronkokoma-based law firm. “About 45 percent of our business is real estate. This has impacted our staff, clients and affiliates in a major way.”
Deals have slowed to a trickle, as banks and buyers have no way to verify titles are clean — meaning the property is free of liens, and the seller is the legitimate and sole owner — without looking the property up on county websites.
Another issue is getting claims on file. While some hand-delivered records are being accepted and kept organized chronologically, they won’t be officially on file until systems are back online. New York is a “rush to record” state, meaning the first person to file a title claim is the one whose claim is counted, so improper filing of documents could lead to serious problems.
Some deals have managed to close despite the disruption. Winter Parker said her business has not yet been dramatically affected by the hack.
Bridget Elkin, a Compass broker, said deals that went into contract within a week of the attack are closing on schedule. She said she was able to close last week on the sale of a home she owns by signing an extra agreement vowing that there were no other claims on the property.
In her case, a title search had been run shortly after the home went into contract, before the ransomware attack, but a second search just before closing had to be nixed.
“The buyer does take on a little more risk,” Elkin said.
But most sales have been put on hold, which means contracts might fall through. It’s unclear if buyers will be able to hold onto their mortgage rate locks if their closings are delayed.
For them, Suffolk County’s fiasco could not have come at a worse time: Mortgage rates have shot up about a full percentage point just in the past two weeks. Some sources reported the average 30-year rate on Friday morning had reached 6.9 percent.
Delayed closings can also wreak havoc on buyers’ logistics.
“People who are selling their own homes and purchasing others may be caught in between, forced to find a temporary residence and/or rental,” said Gulotta.