Law Society and HM Land Registry New Joint Note on Property and title fraud

HM Land Registry and the Law Society have issued a new joint note on property and title fraud, highlighting particular scenarios and circumstances, or key warning signs, where there is a greater risk of fraud.

The dangers of fraud, hacking and connected problems are a major blight of the digital age. Recorded incidents of fraud are increasing with fraudsters continuing to target real estate and finance transactions and the properties of both individuals and corporate entities. This is frequently manifested in attempts (sometimes successful) at fraudulent registrations at HM Land Registry, often entailing forged identity documents.

HM Land Registry and the Law Society issued a joint practice note on property and registration fraud back in 2010. However, fraud techniques have become more sophisticated over the intervening period and HM Land Registry and the Law Society have now issued a further joint note on property and title fraud.

This new note is an awareness note highlighting particular scenarios and circumstances, or key warning signs, where there is a greater risk of fraud. It is a practical guide to indicators of potential fraud in land transactions and registration of title and covers such matters as seller and buyer fraud patterns, vulnerable registered owners and properties, examples of suspicious behaviour, and overseas clients. There is also a section on mitigating fraud threats.

The note is of particular use to the legal profession in assisting with the recognition of potential fraud, but it is also relevant to others involved with real estate transactions in highlighting particular areas of risk.

There have been a number of recent high profile property fraud cases including Purrunsing v A’Court [2016], P&P Property Limited v Owen White & Catlin [2016] and Dreamvar (UK) Ltd v Mishcon de Reya and Mary Monson Solicitors Ltd [2016]. As a result of those cases, there has been some demand from the legal profession for the Law Society to issue guidance on what enquiries the solicitor for the prospective buyer should ask of the seller’s solicitor in relation to the seller’s identity and the checks that the solicitor has carried out. The Court of Appeal is likely to consider this issue when they hear an appeal in the Dreamvar case in 2018 and the Law Society will await the Court of Appeal’s comments before providing guidance on what buyer’s solicitors should be asking of the seller’s solicitor.

For that reason, the HM Land Registry/Law Society note does not and is not intended to set down any professional duties in relation to fraud or dealing with it. What it does do is fulfil the important function of increasing awareness of indicators of potential fraud, for the benefit of both the legal profession and the wider public.

A very important point to bear in mind is that fraud prevention and detection should not be approached on a “tick box” basis. Fraud methods evolve continually and practitioners should look out for anything, which may be unusual or suspicious that may point to possible title fraud. Each transaction should be considered as a whole and it is usually a matter of looking at all aspects of the situation together, and taking an informed view on the likelihood of fraud and the appropriate measures to be deployed against it.

In view of the pending Court of Appeal decision, the joint note does not seek to second guess what the Court may say on solicitor’s duties and for that reason, the previous 2010 joint practice note remains available.

The new HM Land Registry/Law Society joint note on property and title fraud can be accessed here https://www.lawsociety.org.uk/Policy-campaigns/Articles/property-and-title-fraud-advice-note/

The author, Warren Gordon Senior Professional Support Lawyer at CMS, chaired the Law Society’s Conveyancing and Land Law committee that worked with HM Land Registry on the joint note.