Property fraud and how to avoid it
A solid building, made of bricks and mortar, seems an unlikely target for thieves. For most of us our homes evoke a powerful sense of security; ‘safe as houses’ as the old saying goes. But the facts tell a different story, as there has been an exponential growth in property fraud which now accounts for 70 per cent of all frauds.
‘Media reports of a Luton vicar discovering his locks changed and a stranger in his home, is an extreme example,’ says Emma Sidney, a Licensed Conveyancer in the Residential Property team with Geoffrey Leaver Solicitors. ‘However, there is no room for complacency and there is a lot that you and your solicitor can do to prevent you becoming a victim of property fraud.’
What happened in Luton
Reverend Mike Hall made the headlines when a fraudster targeted his modest terraced house in Luton. Working away from home, he was surprised when his neighbours called to say there was someone in his house. Hurrying back, he was even more surprised to find his home stripped of furniture and a builder mid-renovation. When challenged, the builder called the new owner who claimed to have bought the property in good faith. Worse, Land Registry records confirmed the change in ownership and the police initially refused to get involved, saying it was a ‘civil matter’.
Sadly, this was a bad case of a property fraud where the fraudster had used the Reverend’s driving licence and bank details to impersonate him and had purported to sell his home.
The buyer, and their conveyancer, believing they were dealing with the real owner of the property, accepted a fake transfer which moved the sale proceeds to the fraudster’s account. The fraudster then applied successfully to the Land Registry to register the new buyer in place of Reverend Hall.
With registered land, entry in the register is definitive proof of ownership. While the Land Registry may conduct its own investigations, it also relies upon checks by conveyancers. Unfortunately, the Land Registry had already registered the buyer in the register when it discovered the transfer was fake. The rules about correcting the register are complex. In general, the Land Registry will not alter the register if that means displacing an innocent owner who is in occupation. Instead, it compensates the wronged party.
How you, as a homeowner, can avoid becoming a victim
This guarantee of title means victims, like Reverend Hall, have some financial protection. However, it does not compensate for the stress and heartache caused by property fraud and the tortuous process of sorting things out.
So, it is important to reduce the risk of becoming a victim.
- First, consider signing up to the Land Registry’s free property monitoring service. This sends you an alert when the Land Registry receives certain applications relating to your nominated property, for example, a transfer to register a new owner or a charge. It will not block the application, but it gives you the opportunity to take the appropriate action quickly. For example, if you suspect a fraudulent transfer, you should contact your solicitor or the Land Registry straightaway. Title fraud is a crime, although it may need specialist help to identify and address.
- Second, keep your records up to date. When the Land Registry enters you as owner in the register, it will also record your address for service. This is where it will send any notices or correspondence, so make sure yours is correct, especially if you are not living at the property. There is a special form for this, COG1, and you must also provide evidence of your identity. You may give up to three addresses, including an email address. Fraudsters rely on their activities going undetected, so do not make this easy for them.
- Thirdly, you, or your solicitor, can apply to the Land Registry for the entry of a restriction against your title. This will prevent the registration of a new owner unless they first comply with the terms of the restriction. A restriction may be appropriate where there is an additional risk of fraud, for example, because you do not live at the property yourself. The restriction typically requires a conveyancer to certify they are satisfied the person executing a transfer is the same person registered as its owner. Although still dependent on a conveyancer conducting the right identity checks, this adds an additional layer of protection.
You can find more tips on how to protect your property in a guide issued jointly by the Fraud Advisory Panel, the Land Registry and the Law Society.
Take extra care when buying or selling your home
Moving house can be both exciting and stressful, and it can be easy to let your guard down. However, always try to stay vigilant. Conveyancing fraud is on the rise. It may take many forms, and sadly you may be particularly vulnerable when buying or selling your home, due to the large sums of money at stake.
As in Reverend Hall’s case, a fraudster may impersonate the real owner, or pretend to be a conveyancer or claim they work for a genuine law firm. They may then dupe home buyers, conveyancers, or mortgage lenders, into transferring funds into fake accounts. Cyber criminals may even intercept emails, sending bogus requests for money, and exploiting insecure wifi systems.
There are simple ways to reduce these risks. For example, check emails carefully, paying particular attention to any requests to transfer money, or changes to what you agreed previously. If you feel something is not right, or are just not sure about something, call your conveyancer. Telephone them on a number you trust and confirm the position personally. In many cases, people could have thwarted a fraud if they had just picked up the phone or checked things in person.
Our solicitors have robust systems in place to protect you. We will explain these to you and what to be aware of, for example by providing bank details in a secure format. Many safeguards are technology based, for example, encrypted email and online identity verification.
How we can help
As a firm, we believe it is just as important to give you our close personal attention. Diligence and approachability, as well as our technical expertise, are the best ways to keep your transaction safe and on track.
For further information, or to talk about how we can help you move home safely, please contact Emma Sidney in the Residential Property team on 01908 689351 or email firstname.lastname@example.org. Geoffrey Leaver Solicitors has offices in Milton Keynes, Buckinghamshire.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.