There is an increasing amount of press coverage and case law around fraudulent transactions relating to property. There are many types of property related fraud; however, one in particular seems to be on the increase.
Essentially, a fraudster will identify a property over which they have no right of title or beneficial interest. Often it will be a property that is apparently empty. The owner may have gone on a round the world trip or have to go into hospital for a few weeks, or they may have moved into a residential care home. In the case of a buy to let investment, the property may be empty because of a void period between tenancies.
The fraudster will, through identity theft and/or document fraud, pose as the owner of the property and will take out a mortgage against that property, subsequently disappearing with the mortgage monies and defaulting on the mortgage payments. It is generally only when threatening letters start arriving from the lender regarding the default that the actual property owner becomes aware of the fraud and of course has to then deal with the lender.
It is generally the mortgage company that will lose out as it will have no claim over the property, or the Land Registry that will have to pay compensation for allowing a non-proprietor to be added to the title. Nevertheless, it will be particularly unsettling and distressing for someone to find that their home has been used fraudulently in this way. It will be even more upsetting if the property is that of an elderly or vulnerable relative. Of course investment properties, buy to lets, are vulnerable too.
One way of avoiding the situation arising is to use the free Land Registry Property Alert service. This is very straightforward to set up and allows the applicant to monitor up to 10 registered properties in England and Wales. You do not have to own the property, so you can set it up to monitor both your own property and that of elderly relatives, for example . The Land Registry will then send you an email alert each time there is activity that may result in a change to the register of a property you are monitoring, for example, if a new mortgage is taken out against the property.
The bulletin (click here) also explains how a property owner can put a restriction on their title, which means that the Land Registry will not register a sale or mortgage on their property unless a solicitor certifies that the identity of the person who has requested the transaction has been verified.
We think that it is worthwhile taking advantage of the Land Registry Property Alert service to at least provide peace of mind in regard to what is, after all, often the most treasured of assets.
Simon Skerratt LLB
Senior Financial Planner