The last 12 months have seen an increase in the reporting of fraudulent property transactions in both the commercial and residential property sectors. Criminals continue to seek to exploit vacant properties by selling or letting them fraudulently and as a result of the current economic downturn rely on the haste of purchasers and tenants to secure properties at a good price.
Last year, the Evening Standard reported that criminals purporting to be the landlord of vacant residential premises had defrauded thousands of pounds from innocent hopeful tenants who had paid deposits to secure the rentals only for the fraudsters to disappear with their cash leaving them without a home.
There are further stories of properties being sold and charged to third parties without the knowledge of the true registered proprietors and this is a potential threat to those with vast property portfolios. Although the Land Registry will indemnify those who suffer loss owing to mistakes on the register, no indemnity is payable if the loss results from the claimant's lack of care.
The key to prevention therefore is vigilance. Land owners are advised to carry out regular audits and inspections of their portfolios. Tenancies and leases of occupied property should be regularly reviewed (in particular with regards to break clauses and renewals) and vacant property should be adequately secured and monitored. It is also imperative that land owners accurately maintain their address for service at the Land Registry so that they receive notice of any application made to the Land Registry which affects their title, affording the opportunity to object if necessary.
Land owners with unregistered title are strongly advised to voluntarily register title with the Land Registry to prevent fraudulent dealings by those claiming the unregistered deeds have been lost and indeed a restriction could even be registered against title to unoccupied property as a further hurdle over which potential fraudsters would have to jump. Whilst the Land Registry has tightened its identity confirmation requirements, ultimately land owners need to take some responsibility for protecting their properties from fraudulent dispositions.
Tenants should likewise ensure that they carry out sufficient due diligence before committing to an agreement with a landlord. Checks should be carried out at the Land Registry and Companies House to ascertain the true identity of the landlord. Even where a reputable commercial or residential agent is acting, legal advice should be taken on the nature of the agreement to ensure that security of tenure is not compromised before monies are handed over.
Knowledge is therefore power when it comes to minimising the threat of property fraud: know your portfolio in great detail; know your tenants and leases; and know your landlord. For without this knowledge, you could find yourself the victim of financial loss and a party to expensive court proceedings.