Property Fraud – how to avoid becoming a victim

(by Kate Harrison)

We are all becoming increasingly aware of the many ways fraudsters can access our bank accounts and the approach we should take to avoid becoming a victim. We should think carefully before we share confidential information over the telephone and “take five” as recommended by the widely reported campaign launched in September this year by Financial Fraud Action UK Ltd.

Fraudsters are also targeting properties as they impersonate the real owners to either obtain mortgage finance or sell the properties. A typical scenario might involve the fraudster putting pressure on the lawyer instructed to proceed to a quick completion in the hope that the lawyer will not have the time or the inclination to question any anomalies in the evidence of identity or other information provided by the fraudster. On completion the sale proceeds paid to the fraudster’s nominated account will soon become untraceable as the monies are diverted to several accounts, most probably held abroad, in quick succession. Certainly it is most likely this will all have happened well before the real owner of the property is alerted to the fraud.

The risk of fraud is greatest in the following situations:

1. The owner’s identity has been stolen
2.  The property is rented out
3. The property is empty
4. The owner lives abroad
5. The owner’s relationship with a co-owner has broken down
6. There is no mortgage secured against the property
7. The property is not registered at the Land Registry

The following steps will help to protect the property owner:

  • If the property is unregistered consider applying for voluntary first registration. The land registry fees payable are less than those payable following a transaction and any problems encountered on first registration of the title will have been resolved when the property is sold in the future. In addition you would be entitled to bring a claim for compensation from the Land Registry if you suffer financial loss as a result of fraud. If the property is not registered then no such claim can be made.
  • Keep contact details up to date by notifying the Land Registry of any change as soon as possible. Up to three addresses for service may be provided to the Land Registry, with a combination of postal and email addresses allowed.
  • Owners of registered properties can take advantage of the Land Registry’s free online monitoring service called Property Alert. The Land Registry will notify an owner by email when there is certain activity on the monitored property. If an application is made for a priority search to protect the registration of a transfer or mortgage or the registration application has been submitted, the owner will be notified and will have the details of the party who has submitted the application. The owner can then take steps to protect its interest; for example by calling the Land Registry’s property fraud line or the prospective buyer’s or lender’s solicitors.  If the fraud arises in a typical conveyancing transaction the alert would be expected when the priority search is applied for and therefore before the full purchase price has been paid to the seller’s solicitors or the loan drawdown.

Up to ten registered properties can be monitored under one email account.

  • A restriction can be entered on the registered title to the property preventing a transfer or mortgage being registered unless a conveyancer or solicitor confirms that the application was made by the owner of the property.

The fraudsters will no doubt devise new and ever more ingenious scams but these steps at least provide an inexpensive and effective way of protecting what will be for many people their most valuable asset.

For further information or to discuss this news item further, please contact Kate Harrison on the email link below.

This article is filed under:  Industry news, Publications

About the contributor

  • Kate Harrison Partner

    Kate is a partner in our London office, specialising in finance and real estate law including secured finance for investment and development projects.

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