Durham, NC, real estate market at standstill after malware attack shuts down county systems

County systems are slowing coming back online following an attack by Ryuk, the Russian ransomware known for its targeting of local governments.


The News & Observer

By Aaron Sánchez-Guerra

DURHAM — Home buyers aren't able to move into new homes in Durham County and real estate agents aren't able to close home sales days after a weekend malware attack crippled city and county services, including knocking out the real estate department at the county's Register of Deeds.

Residents must physically go to the Register of Deeds office for some services that remain available, such as birth and death certificates and passport processing. Image: Twitter
Residents must physically go to the Register of Deeds office for some services that remain available, such as birth and death certificates and passport processing. Image: Twitter

We have not been able to record transactions in the Register of Deeds office," said Bill Bryan, a Durham partner at commercial law firm Morningstar Law Group, in a phone interview. "We tried and it was not possible to do so. It did delay some transactions."

Morningstar Law Group's land use and commercial real estate transactions have been halted because bar rules prohibit attorneys from closing on properties until after the sale is recorded.

"If you can't record, you can't send anybody their check, the title transfer can't take place," Bryan said. "As long as it's impossible to record, it's impossible to do anything."

And when things do come back online, there's likely to be at least a 24-hour backlog at the Register of Deeds to record transactions, said Maggie Davis, a senior attorney at Mann, McGibney and Jordan, a real estate law firm with offices in Durham and Raleigh.

Davis has had 12 real estate closings postponed this week because of the service outage. Her firm usually handles up to 20 closings a week in Durham.

A ripple effect for buyers

Home buyers are being put in tough situations if they cannot move into their new home after signing documents if the sale hasn't been recorded.

I have heard of people having to live in a hotel until [the sale is recorded]," Davis said. "There's a lot of people understanding and working with one another and willing to grant access to the property for the buyers so they can start moving in."

"There is understanding on both sides of the transaction that it is taking to keep this from being a more dire situation," she said.

Jon Fletcher, a broker-in-charge at RE/MAX United in Chapel Hill, has had transactions in Durham at his firm halted because of the outage.

"It definitely does have a ripple effect," Fletcher said. "It affects a buyer that doesn't get in an arrangement to move in early. Utilities are already being transferred to other people. They may have movers scheduled, cleaners, painters -- and they can't do anything until [the sale] is recorded."

Not being able to close also affects loan payoff dates for the seller, which are typically on the date of the closing. The extended time it takes to close means more days of paid interest on the loan as well as prorated taxes that affect the buyer and seller.

Buyers who lock in an interest rate could have their rate locks expire if they don't close on their house in time, which means buyers could be potentially penalized by their lenders or have to pay rate extension fees.

"It caught everyone by surprise," Fletcher said. He says RE/MAX United was aware of systems being down last weekend, but didn't know the extent of the problem.

According to an updated statement from the city on Wednesday, the restoration process for systems may take two weeks or longer.

A county statement on Facebook says the real estate division at the Register of Deeds office is still being restored without a set date yet. Residents must physically go to the office at 201 E. Main Street for some services that remain available, such as birth and death certificates and passport processing.

Durham County Register of Deeds Sharon Davis said in a statement they are trying to restore operations.

This process involves several layers, a number of which have been addressed," the statement said. "However, there are a handful of elements outside of the Register of Deeds Office's control which must be assessed to protect the integrity of the records and the public's interest. We ask for patience as we continue to recover from the cyber malware attack."

Otto Cedeno, a Realtor with Movil Realty in Durham, says he hasn't been able to close on nearly 20 home purchases and sales since the weekend.

"We have many families that had to close on deals this week and closings have been suspended for the reason that deeds for the properties can't be registered," Cedeno said. "The big issue that this has is that if you're approved for a loan on Monday and you didn't close the sale on Tuesday and Wednesday either, things with banks can change and perhaps loans can be denied afterwards."

The N&O reported that the malware in question is Ryuk, the Russian "premier ransomware, malware type of virus," according to city chief information officer Kerry Goode. The ransomware is known to attack local government entities and demands payments after hacking into systems.

"I know it's not the [Register of Deeds'] fault," said Maggie Davis. "I'm trying to be extra nice."

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