This week BBC Radio programme You and Yours reported on an eye catching story “Luton man left shocked as his house is stolen”.
Rev Mike Hall, who had been working away from home, came back to his home to find the locks changed and builders in stripping the property. When he challenged the builders, they put him on to the “new owner” who had registered a title following a fraudulent sale by an imposter who had stolen Rev Mike’s identity. The fraudster had ordered a duplicate driving licence from DVLA in Mr. Hall’s name, changed the photo, opened an account with the TSB in his name and instructed solicitors to sell the property – all without any knowledge on Rev Mike’s part.
“Vendor fraud” or “property hijack” has been around for some time. Most commonly it happens to rental properties (often with the connivance of tenants). The typical circumstances are that the properties involved are empty, or tenanted, and there is no mortgage in place. As with other forms of fraud, lockdown has potentially made life easier for fraudsters with more routine reliance on electronic signatures and remote transactions. The Land Registry in England & Wales reported £3.5m paid last year in compensation for fraudulent transactions. In both Scotland and England & Wales there is a compensation fund – but to access that it is usually necessary to show some fault on the part of the Registry. If the “hijack” is done cleverly, that might not be an option. Likewise, if the buyer has acted in good faith relying on the seller’s representations, there may well be no remedy available for the true owner to recover the property.
The best prospect for the true owner might be to look to the seller’s (or possibly the buyer’s) solicitors to recover compensation. If the solicitors were negligent, for example in failing to check the seller’s ID or in not picking up on unusual aspects of the transaction (e.g. unusually tight deadlines, no price negotiation, sale above or below market value) then they and their insurers might be liable. The Court of Session case of Frank Houlgate investments v Biggart Baillie established the “implied continuing representation” of a solicitor in a transaction the he/she knows of no fraud or dishonesty impacting on the value of title/security, and the English Appeal Court decision in Dreamvar v Mishcon de Reya established the obligation in trust of a purchaser’s solicitor when releasing a purchase price and the obligation of a seller’s solicitor, where their client is not checked adequately at onboarding, to contribute to compensation for any loss.
Hopefully the Rev Mike will at least recover compensation for his loss, if not title to his house. And hopefully awareness amongst property owners and property solicitors of the risks out there will prompt greater vigilance.