Identity fraud is no longer just about credit cards, fraudsters are after your property too. Property fraud is booming like never before and con artists are finding new and ingenious ways to fleece unsuspecting property owners.
A spokeswoman for the Land Registry ( which is a government body responsible for maintaining a record of who owns all the land in England and Wales ) said: "We recognise that fraud is a problem and we want to make more stringent checks about who is dealing with sensitive information.
Paul Doxey, a forensic accountant at Navigant Consulting, told Channel 4 News 'In the1980s and the 1990s we saw a lot of property fraud, but what's different in the recent frauds is the explosion of ID fraud. It's now a lot easier for criminals to obtain false IDs through the black market, which they can use as a cover for these frauds. '” The Daily Mail last month reported that Gary Miller, a fraud lawyer with Mishcon de Reya Solicitors, said a lack of police resources meant that property fraud had not been 'anywhere near high enough on the police agenda’. ’ My experience tells me that what we see is the tip of the iceberg, ' he added.
Property fraud occurs by criminals obtaining false ID papers of a home owner and then going to the Land Registry to transfer ownership to a new name. Under the new name they obtain a mortgage and then disappear with the cash, leaving the owner facing repossession.
The Registry says it received 55 complaints of information having been obtained from its website for fraudulent purposes, which resulted in paying out some £12 million of compensation in the two financial years from 2005 to 2007.
Latest statistics show that the risk of fraud is still highest following a divorce, when a property is empty or bought to let, when the owner is abroad or absent, or when the owner is infirm or in a home.
The Land Registration Act 2002 abolished the legal significance of a Land or Charge Certificate, possession of which had until then been an owner's proof of title to registered land. This is part of the industry's move towards e-conveyancing, but until this system is fully implemented incorporating the use of encrypted electronic signatures, the present situation could leave some property owners at risk from fraud.
With today's sophisticated counterfeit technology, a determined fraudster could, without too much difficulty, obtain sufficient fake identification and obtain all the information he/she requires from the public register at the Land Registry to carry out a fraudulent property transaction.
Consider the following two hypothetical scenarios, where Landlords and owners of empty properties could be particularly at risk from this form of identity theft: 1. A Landlord rents out his property to a fraudster, who has already provided one set of counterfeit identification prior to commencement of the Tenancy. As he is now in exclusive occupation of the property, it should not present the fraudster with too much difficulty being able to pass himself off as the registered proprietor - to an unsuspecting Conveyancer, Surveyor, Estate Agent and Purchaser. As the Land (or Charge) Certificate no longer has to be produced, this leaves the fraudster free to sell either the whole or part of the property, or alternatively secure a charge by way of re-mortgage to the full market value; in either case pocketing the net proceeds before disappearing into the sunset,
2. An empty property is also vulnerable and can either be broken into periodically to collect correspondence, or the fraudster could easily provide an alternative correspondence address to the solicitor he chooses to instruct, using counterfeit documentation. The property would then be charged or sold and the fraudulent transaction could remain undetected for months, or even years, until such time as the true owner later attempts to deal with the property.
A recent and alarming Court of Appeal decision has given the green light to banks to repossess properties owned by the innocent victims of property fraud.
In Barclays Bank v Guy a fraudster executed a transfer of Mr Guy's property to himself and successfully had the transfer registered at the Land Registry so that he became the registered proprietor of the property. He then borrowed money from Barclays Bank and secured the loan with a mortgage against Mr. Guy's property.
Upon becoming aware of the fraud, Mr Guy applied to the Court of Appeal to rectify the fraudulent transaction and have himself reinstated as the owner of the property and the mortgage in favour of Barclays removed.
The Court of Appeal determined that it was possible to reinstate Mr. Guy as the registered proprietor of the property but the mortgage to Barclays would remain. This meant that Barclays still had a valid power to sell the property for non payment of its loan even though Mr. Guy was not the person who had borrowed the money
This is a staggering decision which effectively means any of us could find our property being repossessed because of the actions of a fraudster. Anyone owning property they do not live in themselves is particularly vulnerable to this type of fraud.
So, what can you do to protect your property assets? Risk prevention is better than cure, " said Malcolm Tarling from the Association of British Insurers. "People need to take reasonable steps” It is important that property owners do what they can to help prevent fraud and to protect their ownership in the same way that they protect other things they own.
A property owner could certainly consider adding a standard form restriction on their title register, particularly where their property is not subject to a mortgage (the existence of a mortgage and the usual accompanying restriction hopefully reduces the risk of fraud involving a mortgaged property). The aim of the restriction would be to prevent the Land Registry from registering a disposition (such as a transfer, lease, charge, or even an easement) without a solicitor certifying that, for example, the transferor is indeed the registered proprietor.
Such a restriction provides a degree of protection against an opportunist con artist. Although this would not prevent a determined fraudster from succeeding, it does present an obstacle and may go some way to protecting the true proprietor from any unauthorised dealings.