How to prevent property fraud

The risk of being a victim of property fraud is greater than ever.

Property fraud is where fraudsters try to “steal” your property. Property is usually the most valuable asset people own. It can be sold and mortgaged to raise money and can therefore be an attractive target for fraudsters. There are various types of property fraud. For example, a fraudster might forge documents to convince a mortgage lender or solicitor that they own the property, and mortgage your property without your knowledge. The fraudster might also use identity theft to impersonate a seller and obtain the proceeds from the sale of the property. You are particularly at risk of fraud if you rent out your property, you live overseas or the property is left empty.

Since 2009, the Land Registry has succeeded in stopping the registration of fraudulent transactions against properties worth more than £74 million.

The case below is an example of how fraud is being perpetrated against vulnerable properties by using identity theft to register a charge against a title.

Swift 1st Ltd v Chief Land Registrar [2014]

This case involved a lender (Swift) who lent money against a legal charge over a property that the “borrower” purported to own. The borrower had stolen the identity of the real owner. The charge was registered and the false owner walked away with the loan proceeds. The fraud was uncovered only when the borrower failed to make the repayments. At this stage the lender tried to enforce its security by taking default possession proceedings and the real owner (who had not been a party to the fraud) had to take action to have the charge set aside and the register corrected.

Property Alert

The Land Registry has launched a monitoring service called Property Alert which will notify you by email if there has been certain activity involving the register of the property. You can then decide whether or not the activity is suspicious and allows you to take immediate action if something happens to your property that you are not expecting. For example, if you receive an alert that a lender has submitted a search on your property but you have not arranged a mortgage, you may want to seek legal advice, contact the Land Registry, or alert the lender who lodged the application to tell them you are the registered proprietor and have not applied for a mortgage.

You can register up to 10 properties in England Wales and there is no fee to use this service.

Updating the Land Registry

If appropriate, you can also let the Land Registry know if you have other addresses for service to include on the registered title as another means of protecting vulnerable properties.

There may be occasions where the Land Registry do need to contact you and if an old address is recorded at the Land Registry, their attempts to reach you may go unanswered. You can register up to a maximum of three addresses which can include email and non-UK addresses.

We set out the links below if you would like to contact the Land Registry to register for the Property Alert service and/or update or add a contact address on the title.

https://propertyalert.landregistry.gov.uk/

https://www.gov.uk/government/publications/updating-registered-owners-contact-address

Account Transfers

Another scam involves emails between firms and clients being intercepted, leading to client funds being paid into fraudsters’ accounts.

A recent example involved a fraudulent email to a couple, from what appeared to be their solicitors, giving them updated bank account details. This resulted in the couple paying £333,000 into the criminals’ account.

If you receive any email communication from your solicitors which asks you to send money to their client account, we recommend that you telephone your solicitors immediately to obtain confirmation that the communication genuinely emanated from them.

It is important to be aware of these increasing types of frauds and take the appropriate steps to protect yourself and your property.

This article first appeared in PrimeResi.