Whilst the property market is slowly showing signs of improving, property fraud is booming.
Fraudsters are finding new ways to commit identity fraud and home owners need to be more vigilant to any form of property fraud taking place. If you think identity fraud is just about stolen credit cards or bank details then read on – it goes well beyond that.
What is property fraud?
Property fraud occurs when a fraudster obtains fake identification and title deeds belonging to someone else and then poses as the owner to either sell the property or take out a mortgage over it, usually from an institutional lender. If successful, the fraudster will pocket the cash from the sale or abscond with the mortgage monies right under the property owner’s nose, leaving the owner saddled with no property and a huge debt to repay. Often property owners only learn that a property fraud has occurred when they try to sell their property or re-finance it, because up until then there has been no need for them to check the position.
The most common situations where property fraud can take place include:-
- When your property is free of a mortgage
- If a marriage or relationship has broken down
- If you have purchased your property as a “buy to let” investment
- If your property is left empty
- If you, as the owner, do not live in the UK
If you fall within any of the above, then your property may be at risk to property fraud taking place.
Safeguarding your property
The system of land registration operated by Her Majesty’s Land Registry is a record of all registered property ownership in England and Wales. Under the Land Registration Act 2002 which came into force on 13 October 2003, every time a property changes hands, it must be registered at the Land Registry and all records and documents held are open to public inspection and are mostly electronically stored. This means that anyone can see if you own your property. Some may argue that this increases the risk of property fraud, however the Land Registry treats all risk of property fraud seriously and has implemented its own prevention measures.
Register your property
Whilst documents may be open to public view, registering your title at the Land Registry will provide you with a state guarantee that should you be a victim of property fraud, you may be entitled to compensation.
The Land Registration Act 2002 introduced compulsory registration, and also allows for voluntary registration as well. If your property is not registered then give serious consideration to registering it at the Land Registry now as a deterrent and unofficial indemnity to property fraud. You do not have to wait until you sell your property to do this.
By registering your property, you will reduce the risk of property fraud occurring as there will be more security against the loss or theft of title deeds relating to your property.
Keep your information up-to-date
By having a registered title, the Land Registry will know where to contact the registered owner. If a potential property fraud is happening and the Land Registry’s suspicion is aroused, they will immediately contact the registered owner and notify them.
If your details are not up-to-date, not only will you not know of the fraud, it could also reduce the amount of state compensation that you may be entitled to if a fraudulent transaction does take place.
You can provide the Land Registry with up to three addresses as to where you can be contacted. These addresses are not just limited to the property address but also include an email address and an overseas address too.
As well as keeping your address up-to-date, it is also important to ensure that your name appearing on the title register is correct too. If you change your name by marriage or divorce, let the Land Registry know. This can be done by providing the necessary documentation to show the change of name. The Land Registry will then be able to update their records to reflect the correct name of the owner. Again, this minimises the risk of a potential property fraud taking place.
One example where failure to keep the Land Registry updated has had disastrous consequences is where a legal owner, let’s call him Jonathan Smith failed to notify the Land Registry that the title deeds to his property were incorrect. In addition, during his period of ownership, the property had been tenanted from time to time, but had also remained empty for extended periods of time. For the last 20 years, his name had been registered against the property in question incorrectly as ‘Jonathon Smyth’ and he had never attempted to rectify it. The title deeds to his property were subsequently stolen from the property where Mr Smith had unwittingly and perhaps carelessly always kept them. As a result and by design one sneaky minded individual with a penchant for property fraud (likely the burglar himself), made in depth enquiries, obtained fake ID and posed as Mr Jonathon Smyth. Jonathon Smyth then re-financed ‘his’ property to the tune of £500,000 and disappeared into the ether with the proceeds. . Meanwhile, Jonathan Smith’s compensation was massively reduced because of his failure to take proper steps to protect himself.
Place a restriction on your title
The Land Registry have introduced a new restriction that a property owner can apply to have entered on to the title register of their property which restricts the registration of a transfer or mortgage unless a solicitor or conveyancer has certified that the person who signed the transfer or mortgage deed is indeed the registered owner of the property.
The effect of having this restriction is then focused on ensuring that the registered owner’s identity is carefully checked. With title registers open to public inspection, registering such a restriction may deter fraudsters from committing property fraud knowing that thorough identity checks will be carried out against them and increasing the exposure of their activities.
This restriction can be placed when you purchase your property or at any time you feel that your property may be at risk to fraud taking place.
Property fraud is serious and should not be taken lightly. If you believe that you may have been the victim of property fraud or there is a chance that your property may fall in a category where it could be at risk of fraud taking place, take immediate action.
Contact the property team at Saracens on 020 3588 3500 to see how we can help you to avoid being a victim of property fraud.