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Mills Selig


Curious case of the 'stolen house' highlights importance of KYC and due diligence

A worrying case was reported by the BBC this morning (1 November 2021) whereby a man called Mike Hall had rented his out his home in Luton while he was away on business. During the course of the pandemic the tenants had moved out and the property had become vacant.

Towards the end of August of this year, Mr Hall was alerted by his neighbours to people being in the property. When he returned the next day, he found that the locks to the property had been changed and that builders were undertaking extensive works to the interior of the property.

Following a confrontation with the father of the person purporting to be the new owner, the HM Land Registry (“the Land Registry”) Title Register was inspected and it did indeed show that the new owner had been registered as the proprietor of the property. 

It appears from the BBC’s report that the property was marketed for sale, a solicitor appointed in the sale of the property, the transaction completed, and sale funds paid out to a bank account, all in Mr Hall’s name, without any knowledge or input from Mr Hall.

The question arises now as to how such circumstances had arisen.

The key issue seems to be that a genuine duplicate driving licence was fraudulently obtained from the DVLA. A copy of this licence was seen by the BBC and they have confirmed that the while the driving licence had Mr Hall’s details, it had a different picture, different title, different signature and was indeed in a different language (Mr Hall’s real licence being in Welsh). What is worrying is that according to the BBC, the DVLA had actually contacted Mr Hall to confirm whether he had requested a duplicate licence, to which he categorically stated that he had not.

The DVLA have further confirmed to the BBC that the licence they issued had the real Mr Hall’s picture on it, and that the fraudsters had subsequently changed the picture to fit their needs. This is especially troubling given that many ID documents are scanned or sent by way of copy due to the pandemic and could be subject to manipulation.

With a key piece of Government-issued photographic identity in hand, this allowed the fraudsters to market the property, instruct a solicitor and to open a bank account into which the proceeds of sale were ultimately deposited.

The BBC had also obtained a recording of the fraudster impersonating Mr Hall and ringing their solicitor and authorising them to sell the property. The firm in question have declined further comment while the police investigation is ongoing, but it is clear from the BBC report that the fraudsters had confidently been in contact with the solicitor by both phone and email, and perhaps even in person.

Unfortunately for Mr Hall, as there is nothing to suggest that the purchaser was acting in anything other than good faith and paid the market value for the property, the property is no longer rightfully his.

As the sole register of property holding in England and Wales, the Land Registry advise that once “property is entered in the register, we record any ownership changes, mortgages or leases that affect it. Anyone who suffers loss because of an error or omission in the register, or because the register needs to be corrected, will normally be compensated.”

This was a very targeted and sophisticated fraud, but due to the factors above it was ultimately successful from the perpetrators point of view as they were able to sell the property for just over £131,000.00. Therefore, while Mr Hall may be eligible for compensation, there is no remedy for the inconvenience and emotional loss of his home.

The BBC mention a figure of £3.5 million being paid by the Land Registry by way of compensation due to fraud last year. According to ONS statistics, the nominal total housing market value in England and Wales was £211.1 billion in the year ending December 2020, so while £3.5 million may be relatively small amount, it is a figure on the rise and is certainly grounds for increased vigilance. Vacant and mortgage free properties are particularly vulnerable to this type of fraud and if the Land Registry do not hold up to date contact details for the owner, they cannot verify any change of ownership.

Fraudsters and scammers are putting increased effort and creativity into these schemes and the Land Registry state that they rely on the diligence of, “professional conveyancers, such as solicitors” to ensure these fraudulent attempts are not successful. The ongoing Covid 19 pandemic has made remote meetings increasingly prevalent, with less, if any, face to face interaction with clients.

Care must be taken to ensure that these circumstances cannot be used as a means of circumventing the usual KYC and due diligence requirements, and any suspicions should be investigated.

Editorial prepared by: Nick Nolan, Senior Associate, Property @ Mills Selig

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