UK: How To Tackle Property Fraud

Last Updated: 29 April 2015
Article by Jayne Elkins and Karen McGinley

Property fraud is on the up, and recent cases highlight the importance of vigilance by solicitors, especially when dealing with vulnerable clients. Jayne Elkins and Karen McGinley investigate.

'Generally, there is less risk of fraud with registered land than with unregistered property, as although the registers are open, there are various steps a registered proprietor can take to protect themselves and the Land Registry does act as something of a safety net:

Property fraud is a hot topic and incidents of fraud are on the increase. Why is this? Arguably, it is largely as a result of a series of changes in Land Registry practice as the majority of property in England and Wales is registered land.

Firstly, since 1990 the Land Registry has been open to the public — anyone can search and find out who owns a property and what, if any, mortgages there may be over it. Secondly, in October 2003, the Land Registry dispensed with traditional paper land certificates, which were watermarked and had to be produced to the Land Registry on any dealing. Now the Land Registry simply provides copies of the registers on completion of a registration and official copies of a title can be requested by anybody at any time. Lastly, and most recently, the Land Registry have now provided for applications for registration of dealings with registered land to be made electronically, with only scanned copies of the relevant deeds, and although a solicitor has to certify that they are holding 'wet ink' originals, there is no requirement for original deeds to be sent to the Land Registry.

Although registered land is probably less at risk of fraud than if it was unregistered, these changes have undoubtedly facilitated the registration of fraudulent dealings and will continue to do so if property professionals are not vigilant.

Recent examples of property fraud

Nearly all property fraud involves dishonest parties posing as property professionals — often posing as bogus solicitors through bogus law firms, or sometimes through bogus branch offices of bona fide law firms. Figures for 2014 show that there were around 186 alerters on the Solicitors Regulation Authority (SRA) website of incidents of the misuse of names of bona fide solicitors or firms. The firms whose names were being used included the complete spectrum, from magic circle firms to small high street practices. A number of frauds also involve 'rogue' property professionals.

Recent cases give examples of the sorts of fraud being perpetrated in the property industry.

Swift 1st Ltd v Chief Land Registrar [2014]

Although this is a 2014 case, the transaction in question took place back in 2006. It did not involve solicitors, but a lender (Swift) who lent money to a borrower, who then executed a legal charge over the registered property that it purported to own. The charge was registered and the fraud only came to light when the borrower failed to make the payments and the lender tried to enforce its security by taking default possession proceedings. At this point, the true registered proprietor (who had been oblivious to these shenanigans) had to take action to have the charge set aside and the register rectified.

The case itself concerned whether Swift was entitled to an indemnity from the Land Registry due to having suffered a loss as a result of the rectification of title Swift got its indemnity, but was lucky not to have had it reduced due to its contributory lack of care. As something of a cautionary tale, it is perhaps worth just listing Swift's failings:

  • no conveyancers were instructed;
  • the loan transaction was conducted solely over the telephone;
  • there was no physical inspection of the property;
  • there was no face-to-face meeting took place with the borrower;
  • no copy passports were seen; and
  • a discrepancy between the borrower's signature on the legal charge and a previous signature on a bank debit card was not picked up.

The case might well have been decided differently if the events had taken place in 2014. An appeal is currently under way.

Santander UK plc v RA Legal Solicitors [2014]

This involved a genuine firm of solicitors acting for a seller, but a 'rogue' conveyancer acting within that firm. RA acted for the buyer and for Santander, who lent money, taking a mortgage on completion of the purchase. The transaction, however, was fraudulent and a forged transfer deed was provided from the seller on completion. Not surprisingly, the sale proceeds disappeared from the selling firm's client account swiftly and the existing mortgage over the property was not discharged. The Land Registry eventually rejected RA's application to register the transfer and the new mortgage and the true owner of the property only found out about the fraud when its solicitors, on a genuine sale, required RA to withdraw a priority search against the property in favour of Santander. RA were held liable to make good the loss caused to Santander by breach of trust and they failed to obtain relief under s61 of the Trustee Act, as a number of failures meant that they had not acted reasonably. RA's failures, which the court criticised, included making inadequate pre-completion enquiries, transferring the completion funds without correctly adopting the Law Society's Code for Completion and failing to deal correctly with the discharge of the existing charge.

Davisons Solicitors (a firm) v Nationwide Building Society [2012]

This involved an innocent law firm becoming unwittingly embroiled in a property fraud while acting for Nationwide Building Society and releasing a mortgage advance on 'completion' to a seller's solicitors who, despite appearing to exist on the Law Society and SRA databases, were fraudsters.

Lloyds TSB Bank plc v Markandan Et Uddin (a firm) [2012]

Here fraudsters went to great lengths in an elaborate scheme. A fraudulent buyer/borrower was in cahoots with a bogus branch office of a genuine law firm who purported to act for the registered proprietor selling the property. The Court of Appeal found fault with the buyer's law firm (inter alia) for failing to establish that the branch office of the seller's conveyancer was genuine.

These are all property frauds where the fraudster's purpose was to obtain purchase monies or a mortgage advance fraudulently, and they all show varying degrees of sophistication. There have, however, also been numerous reports in the newspapers about more basic letting scams where 'landlords' purport to agree lettings with tenants and take deposits and rents in advance for properties which they do not own.

It seems, therefore, that property fraud is becoming increasingly common and can be difficult to spot, but what can property professionals do to guard against fraud and to protect their clients?

It is also important that we do not just carry out the checks as a tick-box exercise, but that all relevant information is looked at carefully in the context of the surrounding circumstances.

Guarding against fraud and protecting clients

  • One thing all property professionals have to do is anti money laundering (AML) and know your client (KYC) checks. We should all follow carefully the recommendations of our professional bodies and liaise with our compliance officers if there is any doubt. It is also important that we do not just carry out the checks as a tick-box exercise, but that all relevant information is looked at carefully in the context of the surrounding circumstances. For instance, it may be easy to check that the age of a client selling or mortgaging a property is consistent with the date shown on the Land Registry's register for the registration of the property in the client's name. A lot of fraud cases involve properties of elderly people who have held a property for a long time and paid off their mortgage, so if the person purporting to be the seller would have been in primary school at the date of the registration, this cannot be right. Likewise, where a company is selling or letting a property, it should be checked whether it was incorporated at the date of registration.
  • Conveyancers acting on a transaction should take appropriate steps to check the details of the firm and conveyancer that they are dealing with, particularly when they are purchasing a property for clients or acting on a mortgage; the Law Society via its 'Find a Solicitor' service, the Council for Licensed Conveyancers and the Institute for Legal Executives all have online databases where details of individual solicitors, licensed conveyancers and legal executives, respectively, can be checked. The Law Society also holds details of law firms and branch offices. There may well be a fraud afoot if the conveyancer or their business cannot be found registered with the appropriate authority, but unfortunately, registration is not necessarily conclusive, as the Davisons case above shows.
  • Interestingly, the Law Society is vigorously defending a claim brought where solicitors did check the Law Society's website and the bogus firm they dealt with was shown on that website. The case involved Nick Christofi who was buying a property and during the process lost over £700,000 to criminals who set up a fake branch office of a genuine law firm to fraudulently obtain purchase monies from him. Mr Christofi's solicitors (Schubert Murphy) had used the Law Society's 'Find a Solicitor' service to verify the existence of the branch office and found that the office was listed on the Law Society's database. Schubert Murphy's insurers are now seeking to recover from the Law Society the losses paid out to Mr Christofi. The basis of the insurers' claim against the Law Society is negligent misrepresentation.
  • Conveyancers should be suspicious if there is anything odd about a 'firm's' website or letterhead, such as indistinct details, a Hotmail e-mail address or no landline number — these are all signs of a possibly fraudulent outfit on the other side. When dealing with a branch office of a firm, check the firm's main website to ensure that the branch exists.
  • Conveyancers must be alert to unusual terms or arrangements in deals that do not make commercial sense. In the Lloyds TSB case mentioned above, the buyer paid the deposit direct to the seller's solicitors and was paying the seller's costs, both unusual occurrences in a residential sale and purchase.

These are all essential precautions to be taken on deals. However, property professionals also have an important role to play in the protection of clients from becoming the unsuspecting victims of fraud during their ownership of a property.

Vulnerable clients

Anyone can be a victim of fraud, but certain classes of property owners are more vulnerable, and some examples are listed in the box on this page.

When acting for clients in these vulnerable categories, property professionals should be proactive in helping them protect themselves: So, for example:

  1. A person who rents out their property, particularly if they have lived there previously and have moved, perhaps with work, and are now renting out their home, must be very careful that they have notified all authorities, banks etc, of their new address and should arrange for their mail to be diverted to a safe, new address. It is very easy for a dodgy tenant to steal their landlord's identity if bank statements and rates demands are landing on their doormat and, as they are living in the property, they will appear to the outside world as the owner.

There are a number of cases where an unsuspecting landlord has gone past one of their properties, only to see a 'For Sale' sign up outside!

  1. A property owner letting out a property, which has been their home is also likely to have just their home address as the contact address in the register at the Land Registry, and should be reminded to update this. Property owners can now have up to three addresses put on the register, including an address abroad and an e-mail address.
  2. Clients whose properties are vacant should also be reminded to update their address at the Land Registry, as it is vital that communications from the Land Registry reach the registered proprietor in a timely manner.
  3. Generally, there is less risk of fraud with registered land than with unregistered property, as although the registers are open, there are various steps a registered proprietor can take to protect themselves and the Land Registry does act as something of a safety net — since 2009 the Land Registry claims to have prevented frauds valued in excess of £70m.

The Land Registry is also obliged either to rectify the register if there has been a mistake, or to pay compensation to the party losing out if the register is not rectified. Fraud is treated by the Land Registry as a mistake, but with fraud (as distinct from a mistake) additional evidence will be required to prove the fraud. It is, therefore, strongly advisable for a client whose land is not registered to apply for voluntary registration.

  1. The Land Registry has also started to provide two new services which all vulnerable clients should be advised to take up.

Firstly, registered proprietors can now track changes to the register of their property or properties, by signing up to 'property alerts' from the Land Registry ( This then means that the Land Registry will send a proprietor who has registered for alerts an alert if someone tries to change the registers to their property — for instance, to register a mortgage. This will not block the transaction from being registered, but it will alert the proprietor straight away so that if the application is not bona fide, they can do something about it.

Alerts can be arranged for up to ten properties without the Land Registry charging a fee for the service.

The other step a registered proprietor can take is to put a restriction on their title to stop the Land Registry from registering a sale or mortgage of their property unless a solicitor or conveyancer certifies that the seller/chargor who executed the document submitted for registration is the same person as the registered proprietor. It is not quite clear how this will work in practice (for example this is of little use if the lawyer dealing is 'bogus'), but it must mean that bona fide solicitors acting in connection with the property will take particular care to check the identity of the registered proprietor purporting to deal.

There are different forms of restrictions for company owners, who can apply for restrictions on up to three properties without incurring a Land Registry fee (; private owners not living at the property, whose application is free (; and private owners living at the property, who are charged £40 (

Any clients in the vulnerable category should be advised to consider these new protective steps at the Land Registry. They are not fool proof, but anything that may help protect these categories of clients against fraud must be worth doing.

  1. Particular care also needs to be taken when taking instructions from a client in any of the vulnerable categories here (and in the box at the foot of this article) particularly on something like a sale or mortgage. It is an occasion for being particularly vigilant on the KYC checks and a face-to-face meeting may well be required to ascertain the client's genuine instructions. Moreover, clear instructions will be needed in writing if instructions are to be taken from a third party on a day-to-day basis.


Property lawyers eagerly await the outcome of the Law Society litigation following the Christofi fraud case. The landscape is currently unpredictable. Lawyers are on the one hand expected to check that firms exist on the Law Society's database but on the other hand cannot necessarily rely on the accuracy of the information that the Law Society makes available. It is hoped that the court's decision will lend certainty as to where lawyers and other professionals stand in relying on the Law Society's database of solicitors to verify the existence of law firms and their branch offices.

Meanwhile (and regardless of the outcome of the Law Society litigation), by following professional regulations and guidance, by being alert, and by being proactive in helping clients to protect themselves, property professionals can play an important part in the battle against property fraud. Some frauds will, however, still slip through and if innocent conveyancers are going to be left 'carrying the can' it is vital that conveyancers follow best conveyancing practice and do not take shortcuts even where a sale and purchase or remortgage might seem straightforward.

This article is based on a lecture given by Jayne Elkins and Karen McGinley of Fieldfisher at the Five Counties Surveyors Conference.

Davisons Solicitors (a firm) v Nationwide Building Society

[2012] EWCA Civ 1626

Lloyds TSB Bank plc v Markandan & Uddin (a firm)

[2012] EWCA Civ.65

Santander UK plc v RA Legal Solicitors

[2014] EWCA Civ 183

 Swift 1st Ltd v Chief Land Registrar

[2014] PLSCS 40   

    Property owners particularly vulnerable to fraud   
  •     Those whose identity has already been stolen.
  •     Those who rent out their property.
  •     Those who live overseas.
  •     Those whose property is empty, eg, holiday home owners, elderly people who have moved into care and personal representatives where the registered proprietor has died.
  •     Those in family disputes or breakups.
  •     Those whose property is not mortgaged.
  •     Those whose property is not registered.    

There are a number of cases where an unsuspecting landlord has gone past one of their properties, only to see a 'For Sale' sign up outside!

This article was first published in the April 2015 issue of the Property Law Journal (Legalease Ltd).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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