Two landmark property fraud case appeals are due to come to their much-anticipated conclusion this week at the Court of Appeal, the outcomes of which could have an enormous impact on both agents and conveyancers.
The cases share one common feature but are in other very different. Both include a central fraudster who posed as the owner of a property they did not own and managed to sell before disappearing with the money and escaping justice.
And in both cases the buyers, who were significantly out of pocket, sought to get their money back from the solicitors or agents involved.
Both cases were appealed and decisions on these are now due this week. Here’s why they are likely to have a significant impact on how agents and conveyancers deal with the UK’s approximately one million property transactions every year.
Dreamvar vs Mishcon De Reya
In a nutshell: a client of solicitors Mishcon De Reya bought a London property but after handing over the money it transpired the fraudulent seller had been renting the house and posed as its owner.
In the original case, the judge ruled that Mishcon De Reya was liable for the £1 million loss suffered by the buyer. The decision was based largely on the fact that Mischcon De Reya was the only party involved with the financial clout and insurance to cover the loss, rather than because it had made any mistakes.
If the appeal judge upholds the original decision, it is feared that many smaller solicitors will be priced out of the market. This is because the high costs of insurance against fraud will too high for them.
P&P Property Limited v Owen White & Catlin LLP/Winkworth
In a nutshell: A man living in Dubai who said he owned a home in London contacted estate agent Winkworth and solicitors Owen White & Caitlin and instructed them to sell his property.
He met the solicitors and apparently completed identity checks but, after being paid £1.03 million for the property into his Dubai bank account, disappeared after it transpired he was a property fraud criminal.
The buyer, P&P Property, then sued OWC and Winkworth to recoup the cash but in the original case the judge ruled that while solicitors’ checks were designed to reduce the risk of property fraud, they could not reasonably be thought to eliminate it.
If the appeal is successful, both conveyancers and agents could be liable for damages when fraudsters successfully trick them into enabling a sale, even if they have undertaken apparently successful measures to prevent it.