I am sorry to report that conveyancing isn’t going to get quicker any time soon!
I have just received the latest Buyer Deposit Redirection Fraud stats* provided by the National Fraud Intelligence Bureau.
Year on year losses are as follows:
- 2014 25 losses
- 2015 86 losses
- 2016 159 losses
Total loss £24.3m. Average loss £90,000, nearly every other day.
Most conveyancers now go to work wondering: “Is today the day I get inadvertently caught up in a property fraud?”
A recent court judgement has, once again, put conveyancers on the defensive.
I will be brief, but in a recent fraud case (involving a fraudulent seller) law firm Mischon de Reya (MdR), acting for the buyer, were held liable for their client’s substantial loss even though the judge found that seller’s solicitors had not been as thorough as they might have been checking their clients ID.
For example, they did not notice that the copy driving licence was only issued ‘very recently’ and was valid for only three years.
The judgement maintained that there was no suggestion that either firm was in any way complicit in any part of the fraud, and that they both acted honestly and innocently in carrying out their respective roles in the purported transaction.
But one of the reasons why the judge found against MdR was that they were insured and that the buyer should be able to claim against someone.
The upshot is, though, that on the face of it at least, a thorough buyer’s conveyancer can be held liable for losses incurred by their client even though they have no way of checking that the purported seller is the genuine owner of the property. This has resulted in more questions being asked about the seller’s ID checks by the buyer’s conveyancer.
On top of this the Land Registry has announced new steps to digitise conveyancing. One proposal is:
To allow for the introduction of fully digital conveyancing documents with e-signatures to be used for land transactions and land registration, and to revoke existing rules allowing only limited digital mortgages.
Many conveyancers currently believe the increase in fraud cases is partly down to the fact that there are no longer ‘deeds’ as such and that the Register is ‘open’ to one and all. They are concerned that digital conveyancing and e-signatures will only make matters worse.
There is an argument that agents should be doing more. They visit the property and often meet the owners and/or tenants in person, and much earlier on in the process. I am not going to get into that argument now but will leave you with the following thought:
Some properties carry higher risks, for example where:
- a property is empty
- a property has no mortgage
- a property is of reasonably high value
- there is urgency or impatience shown by the seller
- replies from the seller seem to lack knowledge or understanding of the property
- there is no onward purchase
This is not an exhaustive list, but where more than one of these situations arise, please be careful and think about mentioning it to the solicitors/conveyancers involved in the transaction.
- The stats above were kindly provided by www.safebuyerscheme.co.uk experts in fraud detection and prevention tools for the property market.
Bold Legal Group