There are inexcusable and unjustifiable problems that
are exposing the public, reputable Solicitors and
their insurers to unacceptable levels of risk. This
article is designed to highlight some of the problems
where fraudsters masquerade as owners of Property
and ‘sell’ it to an unwitting genuine
Buyer. At MS Law we were recently instructed by one
of our regular investor clients to act for them in
a purchase. A nice house in a nice area of South Manchester
at around 40-50% BMV. The ‘Sellers’ instructed
another law firm in the centre of Manchester (not
MS LAW).
The
‘Sellers’ Solicitor sensed something wasn’t
quite right with his clients and he carried out some
excellent due diligence. This raised some alarming
discrepancies and the Police were contacted. It transpired
that the ‘Sellers’ were not in fact the
owners of the property but fraudsters masquerading
as the genuine owners. The ‘Seller’s’
had provided identification to their Solicitors -
including Passports which the Police discovered to
be fake. The fraudsters were arrested the next day.
The
Solicitors’ prudence meant that they immediately
uncovered the fraud before any monies were handed
over. Other Solicitors’ may not have been so
prudent and this would have meant that the ‘Sellers’
would have received the sale proceeds and, no doubt,
disappeared. The Buyer would have been left with nothing
as the fraudsters are unable to transfer a property
they do not own. This scenario was prevented and the
fraud thwarted in this instance.
Fraudsters
can be extremely sophisticated, convincing and be
a part of serious organised crime. If you are an investor,
be aware of fraudsters and have your eyes open. Ask
the vendors background questions, are the vendors
suspicious in any way, is the deal just too good to
be true? Another reason to make sure you chose your
Solicitors well!
It
appears that incidents of fraud have risen in recent
times. No doubt this is in part due to the uncertain
economic times but in my view the system has also
left itself wide open to abuse. Most systems are open
to abuse by any sophisticated fraudsters targeting
them with know-how and resources. But fraudsters often
also pursue soft targets.
Relatively
recently Land Registry documents containing ownership
records have been held on downloadable documents available
from the Land Registry web site. These records are
available to all. Access to these records are generally
only needed when a property is being sold, purchased
or refinanced etc and in these cases most people appoint
legal representatives to act for them who have always
been able to access the documents. Therefore, is there
a compelling argument that should these documents
should be freely available to all ? There probably
is a good argument in support but not one compelling
enough to warrant the potential for abuse it helps
create. It is noteworthy that there is a distinct
absence of electronic security measures in the Conveyancing
system when compared to institutions like banks.
A
Conveyancing Quality Scheme (CQS) has been introduced
by the Law Society and MS Law have been awarded accreditation
of the Conveyancing Quality Scheme. In future, it
will probably be a case that lenders will not allow
Solicitors to act on their behalf without those law
firms being members of the CQS. This scheme seeks
to acknowledge quality so that accredited firms stand
out from the unaccredited. However, it is not a specific
targeted response to the problem of increasing instances
of the type of sophisticated fraud discussed in this
article.
