Luton property fraud down to ‘devastating lack of due diligence’

The Conveyancing Association (CA) has endorsed the view that this week’s shocking story of property fraud in Luton is an example of how sales progression professionals can demonstrate a ‘devastating lack of due diligence’.

The cause, which prompted headlines worldwide, comes just four months after a conveyancing firm was censured by the Solicitors Regulation Authority for sloppy due diligence that enabled a similar property fraud.

Earlier this week the BBC reported that Reverend Mike Hall, who had been working away from his home for some time, had been alerted by neighbours to strangers moving into his Victorian terrace house in Luton (pictured).

It transpired that these were the new legal owners moving in after fraudsters impersonated the clergyman and sold his house for £131,000 while he was away.

The property’s new owners had been registered with the Land Registry successfully and at first local police did not treat the transaction as fraudulent, although an investigation by Bedfordshire Police’s fraud squad has subsequently been launched.

Compensation

The Land Registry, which may have to pay Hall compensation, said it relied on conveyancers to complete identity checks to spot fraudulent sales, but that ‘a very small number’ so slip through every year.

The CA has published the views of affiliate member Lawyer Checker whose representative Sophie Swanborough said: “This recent report about a man’s house being ‘stolen’, is all the more shocking as the audacity and impudence of the criminal when aligned with the devastating lack of due diligence, meant such a situation occurred.”

Lawyer Checker has called on the property industry to be wary of several key types of transactions vulnerable to fraud.

These are empty or unused properties without mortgages and properties where residents – such as tenants – potentially have access to the owner’s post and/or identity documents.

“Without conducting appropriate due diligence on the ‘client’, it’s easy to see how sale funds can be sent to the wrong place,” says Swanborough.

“The conveyancer’s position of trust with client’s funds deserves appropriate checks so that heart-breaking mistakes like this don’t go unnoticed.”