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Property Title Fraud Protecting yourself or your company
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Property Title Fraud Protecting yourself or your company Like many frauds, property title fraud is becoming an increasing modern problem. Commonly, the fraud will be perpetrated by a fraudster who steals the identity of a property owner to sell or mortgage their property before swiftly disappearing with the criminal proceeds. Companies can be impersonated as well as individuals and both residential and commercial properties can be targeted.
David McClenaghan Associate Partner | Real Estate david.mcclenaghan@laytons.com +44 (0)1483 407 000
Property Title Fraud | March 2017
Why is property fraud on the rise?
Who is most at risk of property fraud?
As with all identity theft, technological changes will have had an impact. However, many commentators also point to the Land Registry’s “dematerialisation” of registered land deeds which was introduced in October 2003. From this time, owners of registered land (which includes most property in England and Wales) no longer needed physical custody of the Land Registry land or charge certificate in order to sell or mortgage their homes. Without the need to obtain physical possession of the title “deeds”, fraudsters had only to steal the identity of the owner and then dupe the property professionals involved in the process.
Typically, but not always, the fraudster will be looking for an easy target where the fraud can go relatively unnoticed until it is too late. Certain types of owner and property have been identified as being particularly vulnerable to this type of fraud. Vulnerable scenarios include:
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rented properties
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vacant properties (whether residential or commercial)
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properties that do not have a mortgage
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owners who live abroad
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owners that have already been the victim of identity
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fraud
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properties undergoing redevelopment
Some of the most high profile recent cases in this area include one or more of these vulnerable scenarios: •
Purrunsing v A Court and another [2016] was a straightforward case of a fraudster purporting to sell a property which he did not own. The property was high value, mortgage free and not occupied by the seller. In this case, the fraudster managed to commit a £470,000 property fraud.
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The case of P&P Property Limited v Owen White &
Catlin LLP and another [2016] similarly concerned a fraudster who successfully posed as the owner of a residential property in order to sell it. Remarkably, the fraud only came to light when the real owner walked past his property and saw builders ripping out the kitchen. 4
Property Title Fraud | March 2017
How can you better protect yourself from property fraud? •
Most recently, the Law Society Gazette (30 January 2016 edition) has been reporting another case involving the sale of a London property by a tenant posing as the owner, although the judgement is still to be published.
Whether you are vulnerable to property fraud or simply concerned to guard against it there are a number of sensible steps that you can take to protect yourself from property title fraud. The risk can never be completely eliminated but the following measures will help to mitigate the risk:
1. Make sure your address is kept up to date at the Land Registry The Land Registry hold an address for service of every proprietor of registered land. This is the address by which the Land Registry will contact an owner and so it is important that it is kept up to date with your current address. You can have up to three addresses on the register including an email address and/or an address abroad. If the title to your property is still unregistered you may consider opting for voluntary registration. If you become an innocent victim of fraud and suffer financial loss as a consequence, you may be compensated.
2. Register a restriction at the Land Registry A property owner can apply for a restriction to be entered on the title to their property that prevents any sale or mortgage from being registered without a certificate signed by a conveyancer to confirm they are satisfied that the person who signed the
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Property Title Fraud | March 2017
conveyancing documents is the same person as the owner. Such a restriction will put the conveyancer on a heightened alert to property fraud and, whilst it might not provide total protection from a convincing fraudster, the very existence of the restriction might deter a criminal who is looking for an easy target.
3. Sign up to the Land Registry’s Property Alert Service The Land Registry are actively promoting their Property Alert Service as another measure to protect against the ever-increasing risk of fraud. According to a Land Registry press release in December 2016 over 50,000 have signed up to this free service. Launched in March 2014, the service helps people to detect fraud by sending them email alerts when there is certain activity on their property, such as an application to change the ownership details or a mortgage being taken out against the property. Although this won’t automatically stop fraud from happening, it is a useful early warning of suspicious activity which the home-owner can investigate if it is unexpected. The alert email tells them who they should contact should they be concerned. The Property Alert Service will allow you to monitor up to 10 properties in England and Wales, including the property of a relative, provided that the property being monitored is registered.
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