There is a prevalent risk of fraud in every conveyancing transaction. As fraudsters are establishing more sophisticated schemes to carry out their scams, we provide a few tips below, to assist you, in protecting your residential or commercial properties, against the same.
Recent examples of fraud include tenants using copies of utility bills, linking themselves to a property, to dupe solicitors into believing that they are the seller of the property and/or proceeding to charge the property in favour of a bank, in order to lend money, or to sell a property, leaving the seller with an encumbered property or without title to the property at all.
Conveyancers are currently more alert to this risk and we have recently seen increasing enquiries by solicitors, to verify whether solicitors have carried out money laundering checks against their clients and to request evidence, from the seller’s solicitor, to link a seller to the relevant property.
The recent court cases confirmed that both buyer and seller solicitors are at risk of being held to be in breach of trust, in dealing with purchase monies, in circumstances where there is not a genuine seller or genuine completion, in a conveyancing transaction. The relief provided by section 61 Trustee Act 1925 is also difficult for buyer and seller solicitors to benefit from. Solicitors, as trustees of the purchase money have a higher equitable standard and are therefore taking active steps to protect clients against the prevalent risk of conveyancing fraud.
Owners of property who are located overseas or who rent the property to tenants, are more vulnerable to fraudulent schemes, as occupiers use utility bills to link themselves to a property and to ultimately control the selling process, allowing agents access to the property in question.
However, you can use the Land Registry’s resources to help protect yourself against fraud as follows:
First, you can track changes to the register, by signing up to HM Land Registry “Property Alert Service”, which is available on the Land Registry website. The Land Registry Property Alert is an award winning free property monitoring service, aimed at anyone who feels a registered property could be at risk from fraud. This service will enable you to request property alerts, if someone applies to change the register of your property, for example if someone tries to use your property for a mortgage. This process will not automatically block any changes to the register; however it will alert you, when applications to the Land Registry in respect of your property are made, so that you can take action. You can get alerts for up to 10 properties – there’s no fee. Once you have signed up to the service, you will receive email alerts when certain activity occurs on your monitored properties, allowing you to take action if necessary. If this is the first time you are using the service, you will need to create a new account.
Second, your solicitor can apply to Land Registry to put a restriction on your title to the property. You can stop HM Land Registry registering a sale or mortgage on your property unless a conveyancer or solicitor certifies the application was made by you. There are different types of restrictions available for either business owners, if you are an owner not living at the property and if you live at the property. The fees vary from £0-£40.
Third, you should check your register of title at the Land Registry, to ensure that the “address for service” is correct, to update this if your address changes and it is prudent to ensure this address is not the property itself (especially if you are located elsewhere or it is rented out to a tenant).
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