Property Fraud: that old chestnut

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Sophisticated criminals continue to exploit flaws in the house purchase process to commit fraud. Recent cases suggest that they are specifically targeting mortgage free properties.

It has become evident that there is a simple step that makes it harder to commit this type of fraud and further, to avoid a subsequent allegation of negligence – a step that all letting agents and property managers should be encouraging landlords to complete.

A well-publicised example of residential property fraud involved a £1.3m house in Fulham that belonged to the wife of journalist and historian, Max Hastings. Having established that the property was mortgage free, criminals rented the property on a long lease, covertly assumed the identity of the owner and then sold the property before anyone realised that a fraud had even been committed. This approach is not uncommon.

The fraudsters [or often their surrogates] will go as far as to change their name by Deed Poll in order to obtain a 'legitimate' passport and or driving license. Having obtained the necessary documentation, the fraudster then appoints an estate agent to sell the property. They will stipulate that they are only interested in cash buyers, thus avoiding the additional checks by a lender. The transaction will take place and the funds are sent to the supposed vendors' bank account, which is almost always located overseas.

As a result of these frauds, victims are now taking action against the professionals involved to recover, in many cases, very substantial funds. There is an increasing focus on the possible liability of the agent, especially where the agent has fulfilled the role of both letting agent and selling agent.

In order to protect both the property owner and the professionals involved, any charge free property should be registered with the Land Registry Property Alert Service. The service is free to use and is targeted at anyone who feels a registered property could be at risk of fraud. Once registered the owner receives an alert if any party applies to make changes to the ownership of their property.



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