Property fraud is on the rise and fraudsters use different and sophisticated methods that change all the time. You should look out for anything that seems unusual or suspicious and think about the property transaction, for example, are you being ‘hurried for a quick sale’. Is the seller abroad and trying to sell a property?
Table of Contents
Types of property fraud
Identity theft and impersonation
It is important to note that criminals will impersonate anyone involved in a property transaction, including owners, buyers, borrowers, lenders or conveyancers.
Criminals may use false identification to pose as a buyer, making an offer and then withdrawing it before the exchange can take place. 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.
Sellers’ ID Fraud
- sole owners or unmortgaged properties with absent owners, especially landlords
- owners who are in a hospital or in a care home
- owners who have died
- owners living overseas
- owners who have built up equity in their property.
A criminal may pretend to be a conveyancer or to act for an authorised firm of conveyancers. It is important to verify the details of a conveyancer acting for another party to ensure they are properly registered. Criminals may impersonate solicitors by using fake letterheads, creating email addresses similar to a real firm’s address with only a single letter or symbol difference, or registering a fake sub-office with the Solicitors Regulation Authority (SRA).
Criminals may establish a fake company or imitate an existing one. If a company does not have a Companies House registration number, it could potentially be fraudulent or based in a foreign country. To verify an overseas company, it may be necessary to seek confirmation from a lawyer authorised in that country – even then, they could have hired a fake lawyer overseas!
Title and Registration Fraud
Title fraud is where a criminal steals a property owner’s identity and changes the property title from the true owner’s name to theirs. They may use a Land Registry application to register a forged transfer or mortgage (registration fraud).
They may then apply for loans using the actual owner’s equity as security. To protect against this, it is important to thoroughly check all documentation, ask questions, and follow up on any unsatisfactory responses during the due diligence process.
Land Registry’s register of title is protected by the state guarantee. Someone who has been financially ruined by Land Registry staff’s error is likely to be repaid out of public funds however, the onus of proving is up to you.
Mortgage fraud happens when criminals steal money from a financial institution or a private lender, such as a Bridging Loan Company or an individual, through the mortgage process.
Criminals will 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.
Early warning signs of property fraud
You should be alert to the possibility of property fraud if:
- Your only contact with a buyer or seller is via email or phone number, and you are unable to meet them in person
- the seller doesn’t live at the property being sold, and
- they have not met their solicitor in person, and ID verification has taken place online.
Their behaviour may seem erratic or unusual. For example, they are in a bit of a hurry to sell and are constantly chasing you for updates. This sign of urgency may indicate potential fraud. Other signs may include:
- The seller or buyer is younger than you’d expect. This is much harder to spot if you have never met them in person, but you may get an inclination from speaking to them.
- The property has been owned for a long time and is mortgage-free.
- Are reluctant to answer questions on their motivation or the need for speed.
To protect yourself from property fraud, you should ask your solicitor to:
- Verify the identity of all parties involved in the transaction.
- Check that the property is registered with the Land Registry.
- Ask for identification from anyone claiming to be from the Land Registry.
- Be wary of emails or letters claiming to be from the Land Registry that request personal information or payment.
- Check that the company or individual acting for you is properly registered.
- Consider using the Land Registry’s “Sign up for alerts” service to be notified if anyone attempts to change the registered owner of a property you’re interested in.
It is possible for someone to sell your house without your knowledge either by fraud or deception. For example, a criminal might impersonate you using false or stolen identification, and then sell or mortgage your property without your knowledge. Alternatively, they might commit title fraud by changing the property’s title from your name to their own and then selling it. To protect yourself from this type of fraud, you should be vigilant about checking the ownership of your property and verifying the identity of anyone claiming to be involved in a transaction involving your property. You should also consider taking steps such as signing up for alerts from the Land Registry to be notified if anyone attempts to change the registered owner of your property. If you believe that your property has been sold without your knowledge, you should report the matter to the Land Registry and the Police.
There are several steps you can take to protect your property from fraudsters:
- Keep your personal and financial information private: Don’t share your personal or financial information with anyone you do not trust. This includes your name, address, date of birth, and bank account details.
- Use strong passwords: Use strong, unique passwords for any online accounts related to your property, such as your email, online banking, or property listing sites. Use a combination of letters, numbers, and special characters, and do not reuse passwords across different accounts.
- Be cautious of unsolicited communication: Be wary of unsolicited emails, phone calls, or letters claiming to be from the Land Registry or the police. Do not click on any links or download any attachments from these sources, and don’t provide any personal or financial information in response to these requests.
- Verify the identity of anyone claiming to be involved in a transaction involving your property: Ask for identification from anyone claiming to be from the Land Registry and verify the identity of anyone claiming to be involved in a transaction involving your property, such as a buyer, seller, or conveyancer.
- Sign up for alerts from the Land Registry: Consider using the Land Registry’s “Sign up for alerts” service to be notified if anyone attempts to change the registered owner of your property.
- Check the ownership of your property regularly: Check the ownership of your property regularly to ensure that it is still registered in your name.
- Be cautious when buying or selling property: If you’re buying or selling property, be cautious and do your due diligence. Verify the identity of all parties involved in the transaction, and check that the property is registered with the Land Registry.
There are several types of restrictions that can be placed on a property, depending on the specific circumstances. Here are a few examples:
- Land Registry restrictions: The Land Registry can place a restriction on a property to protect the interests of a particular person or organisation. For example, a restriction might be placed on a property to prevent it from being sold or mortgaged without the consent of a particular party. To apply for a Land Registry restriction, you will need to complete a form and provide supporting documentation.
- Covenant: A covenant is a legal agreement that imposes a restriction on the use of a property. Covenants can be created by the owner of a property or by a previous owner. Covenants are usually recorded in the deeds of a property and are binding on all future owners.
- Planning permission: If you want to make changes to a property, such as building an extension or converting it to a different use, you may need to obtain planning permission from the local council. Planning permission can include restrictions on the use and development of a property.
- Listed building consent: If a property is listed, it may be subject to additional restrictions to protect its historical or architectural significance. If you want to make changes to a listed property, you may need to obtain listed building consent from the local council.
- Tenancy agreement: If you rent a property, your tenancy agreement may include restrictions on how you can use the property, such as prohibiting subletting or making certain alterations
It is illegal for someone to sell a property that they do not own. In order to sell a property, the seller must have the legal right to transfer ownership to the buyer. This typically means that the seller must be the registered owner of the property or must have the authority to act on behalf of the owner.
If someone attempts to sell a property that they do not own, they may be committing fraud or other crimes. This could result in criminal charges and civil liabilities for the seller, as well as potentially voiding the sale and causing problems for the buyer.
To protect yourself from this type of fraud, it’s important to verify the ownership of a property before buying or selling it.
You should also be cautious of anyone claiming to be able to sell a property that they do not own and consider seeking legal advice if you have any concerns.
It is possible to sell a property with a restriction on it, but the restriction may affect the value of the property and the terms of the sale.
A restriction is a legal requirement that limits the use or development of a property. There are several types of restrictions that may apply to a property, such as Land Registry restrictions, covenants, planning permission requirements, listed building consent, or tenancy agreements.
If a property has a restriction on it, it is important to disclose this to potential buyers. The buyer may need to agree to comply with the restriction as a condition of the sale. In some cases, the buyer may be able to negotiate the removal or modification of the restriction as part of the sale process.
The presence of a restriction may also affect the value of the property. For example, a property with a covenant restricting its use may be less valuable than a similar property without the restriction. Similarly, a property with listed building consent may be more valuable than a similar property without the consent.
If you are selling a property with a restriction on it, it’s important to be transparent about the restriction and to consider how it may affect the value and terms of the sale. You may want to seek legal advice to ensure that the sale process is conducted properly and to protect your interests.