It is an unfortunate fact that fraudulent activity in conveyancing is costing the UK billions of pounds every year.
Sophisticated criminals are continuing to find more innovative ways to perpetrate fraud within this area of law and we are seeing an unprecedented rise in criminals setting up bonus legal practices or creating a fake branch within a legitimate solicitors firm.
In recent years there have been a number of reported cases where criminals have held themselves out as solicitors when they are not legitimately regulated. The problem was highlighted in the recent case of Nationwide v Davisons Solicitors [2012] where fraudsters had set up a bogus branch yet claimed to be part of a legitimate solicitors firm.
Mortgage fraud continues to be a particular problem area which has been highlighted in the media following a number of high profile cases. Fraudsters may attempt to acquire ownership of a property either by using a forged document to transfer it into their own name, or by impersonating the registered owner. Once they have raised capital by mortgaging the property without the owner’s knowledge, they disappear without making repayments leaving the owner to deal with the consequences and debt.
According to the Land Registry the properties most susceptible to registration or mortgage fraud are usually empty, tenanted or mortgage-free. The individuals at a greater risk of are:
– owners who do not reside in the property because they live abroad;
– Buy to let landlords;
– Those who are in long term hospital or residential care or where a relationship has broken down.
The question that still remains is how can conveyancing fraud be prevented as recent cases strongly suggest that it is not something that is going to disappear overnight. The Law Society, Land Registry and the Council of Mortgage Lenders have all set up initiatives in an attempt to combat property fraud with some degree of success. In recent years the number of spot checks on mortgage lending and landlords has significantly increased, as has the degree to which due diligence checks are thoroughly carried out.
Solicitors have also been reminded to be extremely vigilant when acting for purchasers in a conveyancing transaction where they are not familiar with the solicitors acting for the purported seller by conducting searches with the Solicitors Regulation Authority, Law Society and “entity checkers” offered by search providers.
Property fraud represents a danger to individuals, businesses and the economy as a whole. It appears that what is needed now to combat future fraud is increased government protection through legislation and more transparency within the entire conveyancing market, together with good legal practice.
Hanne & Co are a member of the Law Society’s quality conveyancing scheme which provides a recognised quality standard for residential conveyancing practices.
