Agent Provocateur: Why there is only so much you can do to prevent property fraud

A recent Court of Appeal ruling indicates that solicitors acting for fake vendors can no longer hope to pin the blame for a property fraud on other parties in the sale.

No sh*t Sherlock – pardon my French.

What has got under my skin is why the hell something hasn’t been done about this fraud before.

As an agent I have almost been the victim, years ago, of the ‘tenant pretending to be seller’ fraud. It was the first such case I was aware of and happened in the early 80s.

It involved one of Chelsea’s best known agents, a house in London’s most expensive street and a princess – you could have made a film. But not only was the film never made but it seems nothing was learnt.

It’s such a clever sting and preys on some obvious human weaknesses.

Prices are set low to pique a buyer’s greed; agents see an easy fast cash sale; solicitors and agents act within a flimsy, barely fit for purpose, know your client legal framework; and the properties for sale usually appeal to fast acting cash buyers – normally developers or dealers used to asking the bare minimum of questions.

The fraud itself is embarrassing to all concerned so that the vast majority never reach the press and possibly not even the police.

It’s no coincidence that properties thus ‘sold’ are mortgage-free and usually freehold.

There is something you can do, but it’s not foolproof, or mandatory, and possibly indicates why it’s not always advisable to leave the Government in charge of safeguarding your biggest asset.

If you register here https://propertyalert.landregistry.gov.uk, you can set up an email alert to warn you when an official search or application is made against your property. If a property is mortgage free and rented, you should be advising all clients to register immediately.

The reason for my reticence about this as a complete answer is that hacking email addresses isn’t that difficult apparently and the alert service fails to allow you to register a mobile number, and hacking a mobile or SIM card is a whole lot more difficult.

So come on Land Registry, allowing alerts to mobiles is hardly cutting edge but might, after 40 years of such frauds, help bring them to an end – especially if you make it mandatory when a property is registered.

* Ed Mead is co-founder of outsourced viewing service Viewber

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5 Comments

  1. Rob Hailstone

     
    “A recent Court of Appeal ruling indicates that solicitors acting for fake vendors can no longer hope to pin the blame for a property fraud on other parties in the sale.”
     
    A bit harsh. Like anyone caught up in a property fraud firms try to defend their position. In the case being referred to (Dreamvar I believe) there were four main rulings:
     
    (i) The judges allowed the appeals of MdR (buyer’s solicitors) and Dreamvar against the judge’s decision that there was no breach of trust by MMS (seller’s solicitors)
     
    (ii) The judges refused to grant relief to MdR under s.61;
     
    (iii) The judges allowed the appeals of MdR and Dreamvar against the judge’s dismissal of their claims based on a breach of the paragraph 7(i) undertaking (Code for Completion by Post)
     
    (iv) The judges dismissed Dreamvar’s application for permission to amend to plead a claim in negligence against MMS
     
    So two of the above state that MdR were successful ((i) and (iii)) and in the other two ((ii) and (iv)) MMS. Either way, one of the two (or both) firms of solicitors were on the hook.
     
    Yes in the Dreamvar case (and with the benefit of hindsight) there were some indicators that all might not be quite right, however as any busy person will know spotting a possible warning sign on a very busy day can be difficult.
     
    Let’s not forget that estate agents also carry out ID checks and they didn’t notice that the seller wasn’t genuine and, in my opinion, it is only a matter of time before agents are also held liable. This should not be about shifting blame but working together and yes, as Ed says, Property Alert should be more widely used:
     
    Property Alert is an award winning free property monitoring service aimed at anyone who feels a registered property could be at risk from fraud.
     
    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.
     
    Conveyancing is complicated, stressful and important. One of the barristers in the case said in a recent webinar that it had to be realised that conveyancing is not a commodity, another has even suggested that personal completions might be the way forward in some circumstances!
     
    I offered PIE readers a copy of a list of Red Flag (fraud) warning signs a few weeks back and over 100 took me up on that offer. I now repeat the offer. If you would like a copy please email me: rh@boldgrop.co.uk. Let’s catch the crooks (or at least stop them) before they ruin more people’s lives.
     

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  2. David M

    Rob you might want to check your email address 🙂

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  3. Rob Hailstone

    Whoops, rh@boldgroup.co.uk Thanks David M.

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  4. RosBeck73

    They also only allow you to register 10 properties. So you have to use different email addresses for each set of ten properties and you may not always monitor the other email addresses that frequently. They should get rid of what seems like an arbitrary limit.

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  5. CountryLass

    I’d argue that a mobile/SIM isn’t harder to hack.

    2 years ago my phone stopped working suddenly, so as I was near the shop I popped in to see if there were signal issues? Nope, somehow my SIM was deactivated? Odd, thought I, but as they managed to reactivate it then and there, I didn’t worry. Til I checked my bank the next day to discover that some thieving drinks-server (bar-steward) had done a £1,500 cash transfer from my credit card to my bank account, then cleaned it out… Fortunately the banks Fraud Team had picked up on it and returned it straightaway.

    They went into the store, managed to get a new SIM card for my account, called my bank (which showed up as my mobile number) having somehow known my security code and pretended to be me. With hindsight, not changing the passcode, which was the same as my paypal which was hacked 3-4 months earlier wasn’t bright, but I didn’t even think of it!

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