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Conveyancing fraud: why it happens and how to avoid it

Feb 6, 2023 | Uncategorised

Conveyancing is an essential part of any property transfer. It’s the legal process whereby ownership is passed from the old owner to the new one.

This transfer is a little more involved than an exchange of goods on eBay, say. It requires the guidance of a conveyancer – this could be either a professional conveyancing lawyer or a licensed conveyancer.

The conveyancing lawyer takes care of all the legal issues surrounding the transfer. This can include:

  • Drawing up contracts
  • Finding out unpublicised information about the property
  • Liaising with the other party’s conveyancing lawyer or conveyancer
  • Handling the transfer of money

Unfortunately, this process can be taken advantage of by scammers.

Take, for example, the story told to the Telegraph’s Consumer Champion. The letter writer says she put in an offer for a flat. As completion drew near, she received an email apparently from her solicitor asking for payment.

She paid £25,000 to a fraudster who had impersonated the solicitor. The email address from which the payment was sent was the same as the solicitor’s – all except for an extra “s” at the end.

Or take Mark and Lisa, who were stung by a similar scam – this time to the tune of £80,500. Halifax reimbursed half of this but said the couple were liable for the rest.

This type of email-based scam is sometimes known as “Friday afternoon fraud”. It’s called this because most completions take place then. This gives criminals a head start in escaping detection.

Conveyancing fraud is rare. But you can reduce the chance of it happening to virtually zero by working with a conveyancing solicitor. Regular contact with a professional will mean you’re highly unlikely to get caught out.

The case of “Dreamvar”

A high-profile case of property transaction fraud was that of Dreamvar (UK) Ltd v Mishcon de Reya and others, or “Dreamvar” for short.

The story goes like this. A small property company called Dreamvar purchased a house in London. The seller was, in fact, a fraudster who was masquerading as the true owner after obtaining their driving licence and TV licence.

The fraudulent documents were certified by a solicitor named Mr Zoi and then presented to another law firm (MMS), which was acting on the fraudster’s behalf.

Mishcon de Reya paid the completion funds of £1.1m on behalf of Dreamvar to MMS. By the time the fraud had been spotted, the money had vanished.

The Court of Appeal ruled that Mishcon was liable for Dreamvar’s losses because it was he (not Dreamvar) who had transferred the funds.

What this landmark case means for future transactions is that conveyancing solicitors now effectively have the role of guarantor in conveyancing transactions. It’s their responsibility to spot any issues and ensure the transaction is genuine.

This is one reason why working with a conveyancing solicitor can be advisable. You can, of course, manage the process yourself – but it’s you who will then shoulder the loss should anything fraudulent take place.

By contrast, conveyancing solicitors know that they’re at risk in instances of conveyancing fraud, so are always on the lookout for anything fishy.

How to avoid it

The scam usually goes something like this.

The victim is emailed a payment request – just as expected. All the details are present and correct. But the email is from an impersonator.

This impersonation is only possible because either the victim or the business has been hacked. The sort code and account number will be those of the criminal, not the right recipient.

Part of the problem here is that by the time the bank has learnt of the crime, the cash has usually been siphoned.

There are several things you can do to reduce the chances of being scammed:

Even if you’re expecting a payment request, double-check that the details are correct. Ring up the recipient and make sure that ⑴ they’ve made the request and ⑵ the bank details are correct.

If it’s a life-changing sum, test the waters with a small payment. Check it’s been received by the right person before paying the rest.

Work with a conveyancing solicitor who will handle the transfer of money for you.

In the case of Mark and Lisa, the initial decision was overturned and they were fully reimbursed – but the bank did mention that its app “explicitly warns users to contact their solicitor before transferring any funds.”

It’s in a solicitor’s interest to keep clients happy, so they have an eagle eye for any suspicious activity.

What can you do if you’re the victim of a conveyancing scam?

The first port of call should be to contact your bank. If you’re unhappy with their decision, you can take the case to the Financial Ombudsman.

You can see if your email account has been hacked at ‘have i been pwned?’

How can a conveyancing solicitor help?

Conveyancing solicitors have strict measures in place to check and double-check the identities of both parties in a transaction.

An experienced conveyancing solicitor will be in regular communication with you about the process, the timeline and the information they require. This transparency about the process and what it involves means that you’ll be suspicious if anything out of the ordinary occurs.

A good solicitor will always be available to talk through the process whether over the phone, by video call or face-to-face.

At Milners Law, our conveyancing solicitors are fast, efficient and flexible – and we know that you’re here for guidance, not jargon, so we keep the legal lingo to an absolute minimum.

All our conveyancing solicitors are members of the Conveyancing Quality Scheme (CQS). This is a badge of quality that shows we have the chops to provide expert guidance that will keep fraudsters at bay.

Looking for advice? Then please don’t hesitate to contact us today for a free, no-obligation quote.

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