Background to property fraud
Identity Theft
The phenomenon of identity theft has assumed alarmingly high proportions around the world today .Advances in technology often fuel identity theft rather than prevent it , as more and more sophisticated means of identity theft are devised by fraudsters .
It is estimated that identity theft costs the UK economy approximately 1.7 billion Pounds per annum . In the UK alone there are around 120 000 cases a year of identity theft ( the worldwide figure is 10 million ) per year . Identity fraud is one of the UK's fastest growing crimes .
Property Fraud
The property industry is not immune against the scourge of identity theft . Mortgage fraud alone is estimated at 700 million Pounds per annum .
Land and buildings are usually the most valuable assets people own.Property can be sold or mortgaged to raise money . They are therefore attractive targets for fraudsters . Identity theft is often initiated by the fraudster by changing the legal owner's registered addresses at the Land Registry enabling the fraudster to gain control over the property ( 3 addresses can be listed ).Even if a fraudulent transfer of a property is held to be invalid ( which is by no means certain ) a mortgage registered against the property can still be held to be enforceable against the true owner ( Barclays v Guy ) , enabling the secured lender to attach the property for unpaid mortgage payments .Compensation by the Land Registry ( where applicable ) can be a long and frustrating process .
Properties which are owned outright are prime targets for fraudulent sales or re-mortgages .
Property fraud risk is at its highest in the following circumstances :
• following a divorce
• where the property is empty
• where the property is bought to let
• where the owner is absent or abroad
• where the owner is infirm or in a home
Sophisticated counterfeit technology helps fraudsters to obtain fake identity documents and gather information from the public register at the Land Registry . Anyone can inspect the Register , find out the name and address of the current owner and obtain a copy of registered title .
The conveyancing process
During the course of the conveyancing process the seller's conveyancing solicitor and the buyer's solicitor will call for proof of identity from their respective clients . However , because of the existence of technology copies of identity documents may not enable the solicitors to absolutely verify that the documents are genuine .
In the course of a transfer both solicitors will conduct certain searches . The seller's solicitor will carry out local authority searches and other searches as required . Near the end of the process the buyer's solicitor will conduct a search to ensure that no mortgages have recently been registered on the property or any of the parties have been declared bankrupt . These searches are unlikely to bring to light any identity theft or property fraud which may have taken place .
Despite increased efforts on the part of Land Registry and solicitors to minimise property fraud , under the present system the risk thereof remains . In some cases the fraudster is in fact aided and abetted by one of the professionals involved in the sale and transfer process e.g. estate agent , mortgage broker and even solicitor . A protective and preventative process needs to be devised and implemented to mitigate against or even hopefully eliminate instances of property fraud .
Identity Theft
The phenomenon of identity theft has assumed alarmingly high proportions around the world today .Advances in technology often fuel identity theft rather than prevent it , as more and more sophisticated means of identity theft are devised by fraudsters .
It is estimated that identity theft costs the UK economy approximately 1.7 billion Pounds per annum . In the UK alone there are around 120 000 cases a year of identity theft ( the worldwide figure is 10 million ) per year . Identity fraud is one of the UK's fastest growing crimes .
Property Fraud
The property industry is not immune against the scourge of identity theft . Mortgage fraud alone is estimated at 700 million Pounds per annum .
Land and buildings are usually the most valuable assets people own.Property can be sold or mortgaged to raise money . They are therefore attractive targets for fraudsters . Identity theft is often initiated by the fraudster by changing the legal owner's registered addresses at the Land Registry enabling the fraudster to gain control over the property ( 3 addresses can be listed ).Even if a fraudulent transfer of a property is held to be invalid ( which is by no means certain ) a mortgage registered against the property can still be held to be enforceable against the true owner ( Barclays v Guy ) , enabling the secured lender to attach the property for unpaid mortgage payments .Compensation by the Land Registry ( where applicable ) can be a long and frustrating process .
Properties which are owned outright are prime targets for fraudulent sales or re-mortgages .
Property fraud risk is at its highest in the following circumstances :
• following a divorce
• where the property is empty
• where the property is bought to let
• where the owner is absent or abroad
• where the owner is infirm or in a home
Sophisticated counterfeit technology helps fraudsters to obtain fake identity documents and gather information from the public register at the Land Registry . Anyone can inspect the Register , find out the name and address of the current owner and obtain a copy of registered title .
The conveyancing process
During the course of the conveyancing process the seller's conveyancing solicitor and the buyer's solicitor will call for proof of identity from their respective clients . However , because of the existence of technology copies of identity documents may not enable the solicitors to absolutely verify that the documents are genuine .
In the course of a transfer both solicitors will conduct certain searches . The seller's solicitor will carry out local authority searches and other searches as required . Near the end of the process the buyer's solicitor will conduct a search to ensure that no mortgages have recently been registered on the property or any of the parties have been declared bankrupt . These searches are unlikely to bring to light any identity theft or property fraud which may have taken place .
Despite increased efforts on the part of Land Registry and solicitors to minimise property fraud , under the present system the risk thereof remains . In some cases the fraudster is in fact aided and abetted by one of the professionals involved in the sale and transfer process e.g. estate agent , mortgage broker and even solicitor . A protective and preventative process needs to be devised and implemented to mitigate against or even hopefully eliminate instances of property fraud .
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