As the conveyancing industry prepares to hear the outcome of the appeal in a landmark property fraud liability case, the legal firm representing one of the vendors in involved has called for all property buyers to be forced to take out fraud insurance.
“I do think [it] would be sensible to look at the possibility of making it compulsory for buyers to take out fraud insurance on every transaction,” says Steven Porter, Partner at JPC Law (pictured, below).
“The cost, as matters stand, is relatively small and with compulsory insurance the premiums may even become cheaper due to the economy of scale.”
The appeal concerns two key test cases. Conveyancing solicitors Mishcon De Reya and Owen White & Catlin were sued by their buyer clients after fake vendors fraudulently sold properties and received the funds before the problem was spotted.
Mishcon De Reya and Owen White & Catline lost the initial property fraud case and went to appeal, which was heard last week. A decision is expected any day.
Steven says that if the two buyers involved in the appeal – Dreamvar and his client P&P Properties – had taken out fraud insurance “it would have meant that both would have been recompensed relatively quickly for their losses thus avoiding not only the considerable and unexpected financial strain but also the anxiety and stress caused by a situation in which they are blameless,” he says.
The controversial case has revealed the shortcomings of the conveyancing process, which leaves vendors, agents and their solicitors open to property and identity fraud.
It was also claimed last week in court by the Law Society that if the conveyancers lose the appeal, many smaller legal firms will be priced out of the property market. Insurance companies, who have always viewed conveyancers as high risk, would increase their premiums, it was claimed.