How to protect yourself from property and payment diversion fraud

by | Nov 9, 2021 | Blog Posts

property fraud

The shift towards online conveyancing has unfortunately led to a rise in property and payment diversion fraud. Land Registry documents are now readily available online making it easier for fraudsters to use the documents to their advantage.

This rise is seeing property owners and potential property owners out of hundreds of pounds. For example, one buyer has been scammed into handing over £640,000.

The Law Society has joined the National Economic Crime Centre and Action Fraud to increase awareness and help people take preventative measures. We look at how you can protect yourself from payment diversion and property fraud.

| What are the different types of property fraud?

Property fraud covers a range of behaviours and activities. From using false identity documents to obtain payments, to illegally transferring the ownership of a property.

  • Identity theft

A fraudster can use the identity of anyone involved in a conveyancing transaction. This can include, for example, the homeowners, the solicitors, or the mortgage lenders. They may pretend to be a buyer of a property using a fake identity, proceeding with a transaction with no intentions to buy. Instead, they will use the information they have gained of the seller to allow them to impersonate the seller in the future.

  • Payment diversion fraud

Similarly, fraudsters may impersonate conveyancers and solicitors by using fake email addresses and letterhead to send out their own bank details. They may even go as far as registering a fake sub-office with the SRA. This will mean that homebuyers will send payments directly to these fraudsters and will lose out on potentially whole life savings and their dream home.

  • Title theft

Fraudsters can also acquire property by using forged transfer documents. By impersonating the registered owner, the fraudsters can sign documents using fake witnesses and register these with the Land Registry.

  • Investment scams

There are many investment scams circling, convincing investors that they can get rich quick and then leaving them with nothing. For example, fraudsters may advertise a plot of land as having investment potential; however, the plot may not exist or cannot be built upon. Or they may advertise an investment property for sale as having good investment potential and rental income, however the property may be in ill condition, costing hundreds in repairs.

| Who is at risk of property fraud?

Anyone can be a target of property fraud, however there are some homes that are more vulnerable than others, these include:

  • A vacant property
  • A rented property- particularly if the homeowner lives overseas
  • A mortgage-free property
  • A previous victim of identity theft
  • An unregistered property.

| How to minimise the risk of property and payment diversion fraud

  • One of the best ways to reduce the risk of your property being subject to fraudulent activities is to ensure that it is registered at the Land Registry with the most up to date information.
  • Additionally, when registering a property, you can add a restriction to the register namely the Form LL Restriction where a property cannot be disposed of unless a certificate is signed by a conveyancer or solicitor, confirming that the person who is disposing of a property is the same person as the Registered Proprietor.
  • The government has set up a free property alert service, which allows homeowners to monitor registered properties for any significant activity. For more information on the service, watch this short video from the Land Registry.
  • Be extremely vigilant. Law firms rarely change their bank details. Never send a payment to your conveyancer/solicitor without confirming their bank details over the telephone or in person. Similarly, if you receive an email from your acting firm that they have changed their bank details, ensure that you check this with your firm over the phone or in person.
  • If you still feel unsure about making a large payment, send a smaller payment to the acting firm first, then call to ensure the payment has been received.
  • Carry out your research before purchasing an investment property. If it sounds too good to be true, it probably is.

| What to do if you fall victim to property fraud?

  • Contact your bank- advise your bank of the fraudulent activity and request that the receiving bank freezes the funds.
  • Advise your solicitor- particularly if the fraudsters posed as your solicitor. This will allow them to investigate and take preventative measures.
  • Contact Action Fraud– by calling 0300 123 2040 or using their website.

At Levi Solicitors, our property and accounts departments are alive to the risks of property and payment diversion fraud. If you have any queries regarding your transaction or payment, please contact your conveyancing team direct, or call our head office on 0800 988 7756.

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