Because the cases of fraud in the sale of property can be so varied, it is not always possible to say exactly who bears responsibility. Obviously, fraudulent sellers are in breach of the law but what about other professionals involved, such as conveyancing solicitors, estate agents, mortgage lenders and even buyers? Generally speaking, the idea that conveyancers are not responsible at all for a fraudulent house sale is not borne out in case law.
To be clear, two recent cases have set the precedent for the fraudulent sale of a house and may well indicate what rulings should be for other types of property fraud, too. In one case that reached the Court of Appeal in 2016, the original ruling that the conveyancers involved in a London house sale were not at fault was overturned. The conveyancing firm involved had initially been cleared of wrongdoing after they had been sued along with the fraudulent seller. The court decided that both the seller’s and the buyer’s solicitors needed to bear partial responsibility and were ordered to make financial contributions to the claimant.
In another case that also reached the Court of Appeal, the estate agency that had marketed a property that was being ‘sold’ by someone who did not own it was sued. In the end, the court ruled that the agency involved, Winkworth, was not liable but the solicitors who had overseen the sale were. As such, seeking expert case management from Redbrick Solutions is likely to be advisable given the case law precedents which provide the legal framework. Although such rulings are by no means definitive, conveyancers must consider themselves at least partially responsible in cases of fraudulent house sales.
What Is a Fraudulent Sale of a House?
In the main, a fraudulent house sale occurs when someone who is not the owner of the property attempts to sell it. In one of the two cases mentioned above, it was the tenant of the rightful owner who committed the fraud by instructing an estate agency to market it for them. However, this is not the only type of fraud that might occur with property. In some cases, people claim to have total ownership of a property when they might only own a share of it or attempt to sell the freehold of a property to which they only have leaseholder rights. It is not just potential buyers who are the victims of such frauds, either. In some situations, a fraudster may attempt to obtain the receipts of a mortgage loan for a home they do not own, effectively defrauding the lender rather than a buyer.
Who Do Property Fraudsters Target?
As mentioned, both mortgage lenders and cash buyers can be targeted by property fraudsters. Very often, this sort of fraud will involve the use of stolen or fake identification so that the person committing the fraud will appear to be the rightful owner of the property concerned. Typically, they will target property owners who are not around much or who are vulnerable in some way. Absentee landlords can be the victims of such crimes, for example. Equally, older people, especially if they own their property outright with no mortgage left to pay, are sometimes targeted by property fraudsters. Where the previous owner has died, some criminals will attempt to sell a property before any rightful beneficiary from their estate can be found. This is something that also, unfortunately, occurs when a property is vacated because the owner has gone into a hospital or a care home.
How Are Conveyancers Duped?
Many property fraudsters are very convincing. They don’t just fool buyers and estate agents but legally trained professionals, too. Indeed, fraudsters have been known to pretend to be a conveyancer or to be acting on behalf of an authorised firm of conveyancers as well as claiming to be the rightful owner of a house which they do not have title to. Checking the details of a conveyancer acting for another party to confirm they are correctly registered is the best way of dealing with such deceptions. Bear in mind that sophisticated fraudsters may register a false sub-office with the Solicitors Regulation Authority, use fake letterheads or even email addresses that can be very convincing. Safe Harbour compliant Biometric ID checks are now fully integrated into Redbrick’s conveyancing case management solution. This enables our users to confirm they are dealing with genuine clients and offers some protection in the case of a fraud being committed. Indeed, over 3,000 conveyancing professionals use our software every day to help them avoid such potential pitfalls and legal liabilities.
Warning Signs of a Fraudulent Sale of a House
If the only contact details you have for the other party are their telephone number and email address, then this may indicate that fraud is being attempted. Sole reliance on utility bills as proof they live at the address concerned can also be a warning sign. If these documents are not borne out by what you find on the electoral register, then it could also indicate a greater likelihood of problems. Changes to bank accounts that are made late in the process can also be used to flag potential fraud.
Redbrick Case Management Solutions
Our software can help you to ensure that the conveyancing process not only runs smoothly but that any important steps are not missed which could allow a fraudulent transaction to slip through.
If you would like to find out more, please don’t hesitate to get in touch with a member of our team today.