Recently we have seen a significant rise in clients looking to recoup a bad investment. Typically the bad investment is related to property.
One such example is a case in which I acted for over 100 people who had been scammed into entering a partnership with various property Companies which just happened to all be under the control of the same person. The clients were told that their money would be used to buy run down properties which would then be refurbished and sold for a large profit. The clients would get half of the profit. The projected profits were eyewatering and if achieved would have made the clients a lot of money.
In fact the properties were already owned by the Companies, were subject to existing mortgages and the Companies had no intention of refurbishing them. Instead they ran off with the money before going into liquidation.
The solicitors who acted for the clients had been appointed by the property Companies and fortunately I was able to agree terms with the solicitors insurers which my clients were happy to accept.
There are some golden rules to follow before ever investing money in a property scheme:
1. Instruct your own solicitor not the solicitor instructed by the scheme organiser. Your solicitor will check out the title and make sure you have a written agreement that protects you.
2. Go and visit the property. Make sure it exists and check its condition – if necessary get your own survey and valuation.
3. Check out the joint venture partner – look on google; social media and forums and make sure no one else has already been stung or is complaining about a similar investment.
The SRA has issued some helpful guidance which is worth a read.