Article written by Laura Danquah, Compliance Manager
A recent case highlighted the perils of conveyancing fraud following the sale of a property in Luton whereby the transaction was completed and the homeowner was completely unaware.
In this scenario, the man, who was alerted by neighbours whilst working away in North Wales, returned to his home to find it had been stripped of all furnishings and sold. An investigation, carried out by the BBC, found the gentleman’s identity had been stolen and used to sell the house allowing the fraudster to bank the proceeds. The exact details of how the fraud was carried out are still unclear, but it is possible that the fraudster was able to dupe the solicitors by obtaining a genuine driving licence from DVLA to use in identity checks.
Criminals have succeeded in scamming large amounts of money from the public and a lack of due diligence can aid such criminals. According to the BBC, the Land Registry paid out a total of £3,500,000 in compensation for fraud last year.
There are many factors to consider including:
1 – Vacant, tenanted (or irregularly inhabited) properties with no mortgage are at particular risk – criminals could find these to be an easier target for this kind of fraud
2 – Access to personal documentation – driving licence details, for example, as was the case in this instance, can allow a fraudster to set up a bank account in the victim’s name which then provides a second proof of identity.
3 – Criminals can intercept post to a particular property via a ‘simple’ redirect request. In one case we have heard of, criminals sealed up the vacant property’s letterbox and put an external box by the door so they could intercept post.
The Law Society advises:
Solicitors (including Grant Saw) must have a policy in relation to the avoidance of involvement in property and mortgage fraud, which must include:
- Carrying out relevant checks in relation to the conveyancer acting for the other party
- A documented risk assessment that identifies the warning signs of fraud and assesses the risks
- A documented procedure for dealing with transactions where there is a significant risk of fraud
- A documented procedure for enhanced checking of the identity of the practice’s clients where a higher risk of fraud is present
- A documented procedure showing how the practice will proceed when acting for a buyer where there is a significant risk of a fraudulent seller
- Regular (at least annually) training to all relevant members of staff.
We would strongly recommend that all property owners, especially those living abroad or landlords of rental property, register with the Land Registry property alert service so that they receive e-mail notification of any applications made to the Land Registry. The link is here.
Selecting a firm of solicitors experienced in property sales and purchases and who offer a bespoke service should reduce the risk of a fraudster being successful.