Property fraud is on the rise and fraud methods change all the time. You should look out for anything that seems unusual or suspicious, and think about the transaction as a whole. Usually there will be more than one sign that fraud is being committed.
This guide covers:
- types of property fraud
- warning signs of property fraud
- due diligence
- reporting money laundering suspicions
- Land Registry property fraud line
- case law
Types of property fraud
Identity theft and impersonation
Criminals may impersonate anyone involved in a property transaction, including owners, buyers, borrowers, lenders or conveyancers.
Criminals may use false ID to pretend to be a buyer and make an offer, then withdraw before exchanging. They can then use the information they’ve learned during the process to commit title fraud on the owner of the property.
They may also continue with the transaction and steal any money raised from the lender.
Criminals may attempt to sell or mortgage a property by impersonating an owner using false or stolen ID.
Criminals often target:
- sole owners, especially of unmortgaged properties
- absent owners, especially landlords
- owners who are in a hospital or care home
- owners who have died
- owners living overseas
- owners who have built up equity in their property
Criminals may submit forged discharges (a formal recognition that a mortgage has been paid off).
Be wary if the source of the discharge is not a lender regulated by the Financial Conduct Authority, or where the lender itself does not give you the discharge.
A criminal may pretend to be a conveyancer or to act for an authorised firm of conveyancers. You should check the details of a conveyancer acting for another party to make sure they’re correctly registered.
Criminals may impersonate your firm by:
- using fake letterheads
- using email addresses with a single letter or symbol difference from the firm’s real address
- registering a fake sub-office with the Solicitors Regulation Authority (SRA)
If you receive messages from Land Registry about a property that you do not recognise, contact them – it’s possible your firm name, or its headed paper, has been forged and used fraudulently.
It’s also worth checking online for unauthorised websites that may have been set up to impersonate your firm.
Criminals may set up a false company or imitate an existing company.
If there’s no Companies House registration number for a company, it may be fraudulent or an overseas company. If you want to verify an overseas company, you may need a lawyer authorised in the other country to give confirmation.
Title fraud is where a criminal steals a property owner’s identity and changes the property title from the owner’s name to theirs. They may use a Land Registry application to do this by registering a forged transfer or mortgage (registration fraud).
They can then apply for loans using the true owner’s equity as collateral.
When conducting due diligence, you should check all documentation, ask questions, and follow up on any unsatisfactory replies to mitigate this.
Land Registry’s register of title is protected by state guarantee. Someone who has been damaged by an error in the register is likely to be repaid out of public funds.
Mortgage fraud happens when criminals steal money from a financial institution or private lender through the mortgage process.
Warning signs of property fraud
You should be alert to the possibility of property fraud if:
- the only contact details a party provides are their telephone number and email address
- you're instructed by one party and only communicate with the other by post, telephone and email
- your client relies on utility bills as evidence that they live at a certain property
- the seller does not live at the property
- information given by your client is different to information on the electoral register or information you discover when researching the property
- changes are made during the process to your client’s details or the bank account any funds will be paid into
The client’s behaviour may suggest property fraud is being committed if:
- the property has been owned for a long time, but the client selling it is younger than you would expect
- the client is reluctant to answer questions
- the client asks you to write to a different address, though they say they are the owner-occupier
Signs of urgency may indicate property fraud. For example:
- the client asks that the process is completed urgently without explaining why
- the property is listed at less than its market price, to speed up the sale
Not meeting your client face to face is a factor that must be taken into account in assessing whether the matter presents a higher risk of money laundering, and the extent of any enhanced due diligence measures you should apply.
See paragraph 4.12.1 of the anti-money laundering guidance for the legal sector.
Reporting money laundering suspicions
If you have reason to suspect property fraud then you may also suspect that a money laundering offence is taking place. If you know or suspect a money laundering offence is taking place, then you must make a disclosure to your firm’s money laundering reporting officer (MLRO).
If you are the MLRO and you know or suspect a money laundering offence then you must submit a suspicious activity report (SAR) to the National Crime Agency.
However, you should not submit a SAR if the information giving rise to your suspicion or knowledge is covered by legal professional privilege (LPP), unless the crime/fraud exception to LPP applies. For further information on submitting a SAR, see chapters 6 and 9 of the anti-money laundering guidance for the legal sector.
Land Registry property fraud line
Phone: 0300 006 7030
Opening times: 8.30am to 5pm, Monday to Friday
Edward Wong Finance Co Ltd v Johnson Stokes & Master  1 AC 296
Even where you’ve followed usual professional practice, the court may decide you exposed someone to a foreseeable and avoidable risk which amounted to a breach of duty of care.
Purrunsing v A’Court and Another  EWHC 789 (Ch)
Conveyancers on both sides of a transaction can be equally liable for protecting clients’ money, whoever they are acting for.
Dreamvar (UK) Ltd v Mishcon de Reya and Mary Monson Solicitors Ltd  EWHC 3316 (Ch)
In Dreamvar, the fraudster seller’s solicitor had not carried out all the identity checks that were needed.
The Court of Appeal found that the buyer’s solicitor:
- had not been negligent
- was liable for breach of trust in parting with the completion money at a non-genuine completion
- could not obtain relief under the Trustee Act 1925
The court found that the seller’s solicitor:
- breached their undertaking to the buyer’s solicitor implied by the code, which required the seller’s solicitor to use the money for a genuine completion
P&P Property Limited v Owen White & Catlin  EWHC 2276 (Ch)
If a client appoints a solicitor, the only warranty a third party can rely on is that the solicitor has authority to act on behalf of the client. They cannot assume that the solicitor can vouch for the client as the genuine owner of the property to be sold.
Joint Law Society and Land Registry note – helps solicitors identify signs of fraud
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