Anyone who thought the dealing with a global pandemic meant an end to property fraud was wrong. With large sums of money involved, there are always people trying to scam you.
Here are two scams specifically targetted at property sales, but the techniques are often used with other less lucrative purchases …
The ‘Stealing Your Home’ scam
The BBC recently reported on the case of a man’s house being ‘stolen’ in Luton.
The facts of the case are depressingly familiar: a fraudster stole the identity of an unsuspecting homeowner, sold his home from underneath him while he was away, and disappeared with the proceeds.
This sad case once again brought into sharp focus the need to follow the Law Society’s guidance when undertaking due diligence before buying property, and not necessarily relying on just one identity check. With something as valuable as a house, it is important to consider all the circumstances of the sale and be ready to question it if anything does not add up.
Issues you and your conveyancer should look out for
Coming across just one of the circumstances below may not be cause for alarm, but multiple instances should put you on your guard that the seller may not actually be the legitimate owner:
- the seller’s conveyancing solicitor is not located close to the property;
- their ID documents have been issued recently;
- the seller has little knowledge of the property they are selling;
- the seller has no documents linking them to the property being sold, such as council tax or utility bills;
- it is a high value property, particularly if there is no mortgage to pay off;
- or if a quick sale is required for no obvious reason.
All parties – the conveyancers, the estate agents, and the buyers – should be vigilant.
Avoiding having your home ‘stolen’ is simple
According to the BBC,
However, preventing this fraud from happening to you is a simple and cheap matter. Visit the Land Registry website and set up a property alert here:
https://propertyalert.landregistry.gov.uk/propertyalert/
It will then generate email alerts for a property, monitoring activity so that you don’t have to. Taking this step costs nothing – and can save thousands.
Payment Diversion Fraud
Payment Diversion Fraud is another increasingly common type of property fraud.
In Payment Diversion Fraud, criminals hijack email communications between lawyers and their conveyancing clients, then contact the clients pretending to be the lawyer. The object is simple: they are trying to persuade people to send funds to an account that they control, and not to the correct solicitor’s account.
Avoiding falling victim to this fraud is also a simple process.
If you ever receive an email purporting to be from your lawyer advising you that their usual bank account has been frozen, STOP.
Especially if they then ask you to send funds to a new account.
You should immediately contact your conveyancing solicitor, using a telephone number you have previously used to contact them, and verify the account details.
Even sending small test payments is not a guarantee that you are sending funds to the right account.
If you are in any doubt speak either to your conveyancing solicitor, or to another senior member of the firm.
At Cunningtons LLP, that would probably be Jason Bradshaw, our Compliance Officer for Finance and Administration to check the details BEFORE you send any money.
This kind of fraud is becoming more popular, even though stopping it is, once again, a simple matter.
Payment Diversion Fraud in action
Reported in October 2021, a case study showed that scammers stole £640,000 from an unsuspecting purchaser, in exactly this way.
They had intercepted email communications between lawyer and client, created a spoof email account with a name very similar to that of the lawyers, including forging the firm’s headed paper, and requested payment of the exact amount of money the home buyer was expecting to pay.
On this occasion, payment was sent to the fraudster’s account, and was never recovered.
When the fraud came to light and it turned out that the lawyer had not requested the funds, it had a devastating life-long impact on the client’s life and finances.
Avoid falling victim to Payment Diversion scams
How can you protect yourself against this property scam? There are steps you can take:
- Contact your lawyer at the outset of your transaction by phone to check their bank details, to be sure it matches your expectations.
- Lawyers VERY RARELY change their bank details, so if you do receive communication that this has happened, you should be wary and contact your lawyer BEFORE tranferring any funds.
- Set strong passwords and ideally two factor authentication on your email account to help stop fraudsters hacking your account and spoofing your communications.
- Avoid using public wi-fi for banking apps, or when checking emails about your transaction.
- If in doubt do not transfer funds until you are sure you have verified the bank details you are sending funds to, speaking to your lawyer personally on the phone using a number you trust.
- Essentially, you should never trust details given in an email when large sums of money are involved. No-one minds a phone call to check account details.
Be careful with your money
We hope this article has been of help and has highlighted some of the risks we all have to deal with when dealing with large sums of money.
Always check that you are sending your money to the right place.Please stay VIGILANT!
So what happens if a Seller is asked a direct question & they lie on the property information form & answer a question deliberately telling a lie, to hide something & you find out they actually knew about it? Is it classed as Fraud. If it is, is there a definite limitation period?
Thank you for your comment.
Misrepresentation claims can broadly be broken into three categories. These are innocent, reckless or negligent and fraudulent misrepresentation. The type of misrepresentation can have an effect on the remedy, compensation or damages that you can claim.
Fraudulent misrepresentation occurs when someone knowingly misrepresents the facts of something which causes the other party to enter into the contract in question. In this case, you are saying that by reason of what was said in the property information form, which the seller knew was factually inaccurate, you entered into the contract to purchase the property and this caused you a loss.
Whilst a little more complex, you are right that under the Limitation Act 1980, the period for bringing a claim for misrepresentation (normally 6 years) can be postponed and will not start to run until the fraud, concealment or mistake is or (quite importantly) could reasonably have been discovered. Most cases where this issue arises turn on when it can be said that the claimant, with reasonable diligence, could have discovered the fraud. For example, in the relatively recent case of European Real Estate Debt Fund (Cayman) Ltd v Treon and others [2021], the Claimant pursued a fraudulent misrepresentation claim. However, the Court held that the normal limitation period would apply and dismissed the Claimant’s claim. In simple terms, the Claimant argued that the Court was not allowed to take account of information available to the Claimant before the fraud was committed and the loss suffered. However, the Court disagreed and said that it was entitled to take account of all of the information available to the Claimant in determining when, with reasonable diligence, it could be said that the fraud would have been discovered. Such cases are far from straightforward legally.
We have a series of blogs on property misrepresentation that you might care to consider. Details of some real cases can be found here. We suspect that you might find some guidance here. This particular blog on property fraud is more aimed at identifying the ways in which fraudsters might try to steal money from you.
If you have been the victim of a property fraud, we may be able to assist, so do feel free to get in touch. For example, we have worked for clients who have been the victims of mortgage frauds, when vast sums of money are borrowed from a mortgage lender and the lender then pursues our clients for payment or looks to take possession of the victims home, believing that it was them that borrowed the money when in fact it was a fraudster taking out the mortgages and receiving the funds. Such mortgage frauds can sometimes be complicated and often involve several parties, including surveyors/valuers, mortgage brokers and even solicitors and licensed conveyancers. Often the primary issue in cases such as these are evidential. A fraudster gets away with what they are doing because they take steps to ensure that it looks like the victims borrowed the money and are liable for the debt, for example, by expertly forging signatures and stealing personal information to add legitimacy to the transaction. Much of the time it is necessary to identify evidence which shows that it could not possibly have been the victim that borrowed the money as a starting point.
Broadly, a contract that is entered into pursuant to a fraud will not be upheld by a Court as a matter of public policy; the Court will not allow itself to be used to further fraudulent activity. This can sometimes mean that the victims have a defence of illegality to the claim against them and this can result in a declaration from the Court that the debt is unenforceable against the victims.
Do feel free to get in touch if you would like to consider your matter further, although as mentioned, a very “old” claim may very well have a number of difficult legal hurdles to jump.