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Zoe Athill Zoe Athill Associate
31 July 2017

Fighting property fraud – don’’t be a victim

Amidst an environment of increasingly rapid and remote conveyancing transactions, property fraud by way of forged deeds, such as a transfer, mortgage or even the discharge of a mortgage, has been made easier. Over the last 10 years, property fraud has been on the increase. This article explores what can be done if you find yourself a target of property fraud.

An increasing problem?

The relative ease with which the registration of property transactions can take place these days is a product of the Land Registry’s online system of registration of title and the move to e-conveyancing. Gone is the day when watermarked land certificates were required to prove a person owned a property, which had to be produced to the Land Registry on every transaction. After 2003, land certificates were dispensed with as the records went paperless and were then made available online to the public in 2006. Most recently, electronic copies will be accepted, with no need for original deeds to be sent to the Land Registry.

Whilst property fraud comes in many different guises, we have encountered several instances where property owners have discovered that their properties have been sold without their knowledge. In one case, the fraudster masqueraded as the property owner and instructed the agents and solicitors, by email, to deal with a speedy sale of the property to a cash buyer. A fake passport was used to satisfy the solicitors of their identity. A forged signature was used in the transfer deed and the purchase monies were shipped off to a bank account in Hong Kong. The fraudulent transfer of the property was registered at the Land Registry. Following investigations and applications to the Land Registry, the rightful owner has now been successfully restored as the registered proprietor.

What can you do when you encounter a fraudulent transaction?

  • Contact the Land Registry as soon as possible to report the suspected fraud. They may be able to put a temporary protective application against the property to prevent further transfers taking place, as an initial precautionary measure.
  • The Land Registry has a property fraud line which was launched in February 2013. This can be used to alert the Land Registry if you are worried your property may be subject to a fraudulent sale or mortgage. You can speak to specially trained staff for practical guidance about what to do next.
  • Report the fraud to the police (Action Fraud).
  • Lodge the appropriate application(s) at the Land Registry without delay. This might include an application for a restriction against dealings or notice against the title or an application for alteration of the register. An alteration application should be as detailed as possible and accompanied by supporting evidence.
  • Whether or not a register can be altered will depend on a number of factors. If the register cannot be rectified, you may be entitled to compensation from the Land Registry under their indemnity scheme, although this is not an automatic entitlement and you need to be careful not to have contributed to any loss suffered. If you are the buyer in a fraudulent transaction, you might consider breach of trust or breach of warranty claims against the conveyancers.

Future change?

There have been proposals by the Law Commission to update the law in this area, including requiring conveyancers to assume even more responsibility for fraudulent transactions; tightening up the declaration in Land Registry forms as to the genuineness of documents; and introducing new statutory duties of care in respect of the grant of deeds or when it comes to verifying identity.

In the meantime, if you encounter any unexpected or suspicious activity, contact the Land Registry and seek legal advice as soon as possible.

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